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Minnesota

Sales Tax Rules

6.875%
State Rate
8.375%
Max Combined
Exempt
SaaS
$100k
Nexus Threshold

Minnesota imposes a state sales tax rate of 6.875%, with a maximum combined rate (state plus local) of 8.375% when local taxes are added. Economic nexus is triggered at $100,000 in sales or 200 transactions — meaning out-of-state businesses that exceed this threshold must collect and remit Minnesota sales tax. SaaS and digital software products are generally exempt from sales tax in Minnesota. Groceries are exempt from state sales tax.

Full Tax Details

State Sales Tax Rate6.875%
Max Combined Rate8.375%
Economic Nexus (Sales)$100,000
Economic Nexus (Transactions)200 transactions
SaaS TaxableNo
Digital Goods TaxableYes
Groceries ExemptYes
Clothing ExemptYes
Filing FrequencyMonthly, Quarterly, or Annual
Online FilingAvailable

SaaS Tax Details

SaaS is generally exempt as a service; however, prewritten software is taxable.

Grocery Details

Food and food ingredients are exempt; prepared food is taxable.

How Minnesota Compares to Neighboring States

StateState RateMax CombinedSaaSGroceries
Minnesota ★6.875%8.375%ExemptExempt
Iowa6%7%TaxableExempt
North Dakota5%8.5%ExemptExempt
South Dakota4.2%6.2%TaxableTaxable
Wisconsin5%6.1%TaxableExempt

Frequently Asked Questions — Minnesota Sales Tax

What is the sales tax rate in Minnesota?

Minnesota's state sales tax rate is 6.875%. When local taxes are added, the maximum combined rate can reach 8.375%. The actual rate you pay depends on the county and city where the purchase is made.

What is the economic nexus threshold in Minnesota?

Minnesota requires out-of-state businesses to collect sales tax once they exceed $100,000 in sales or 200 transactions in a calendar year. Once nexus is established, the business must register, collect, and remit Minnesota sales tax.

Is SaaS taxable in Minnesota?

No. SaaS products are generally exempt from sales tax in Minnesota. SaaS is generally exempt as a service; however, prewritten software is taxable.

Are groceries taxed in Minnesota?

Groceries are generally exempt from sales tax in Minnesota. Food and food ingredients are exempt; prepared food is taxable.

Are digital goods taxable in Minnesota?

Yes. Minnesota taxes digital goods including downloaded software, music, movies, and e-books. Businesses selling digital products to Minnesota customers should collect sales tax.

Are clothing items exempt from sales tax in Minnesota?

Yes. Clothing is generally exempt from sales tax in Minnesota, which can provide meaningful savings for residents on everyday purchases.

How often do I need to file sales tax in Minnesota?

Minnesota requires sales tax filing on a Monthly, Quarterly, or Annual. Online filing is available through the official Department of Revenue portal.

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Official Source

Minnesota Department of Revenue

View Official Site →

Last verified: 2026-03-26 · Always confirm current rates with your tax advisor before filing.