Starting from October 1, 2023, there will be some changes to sales tax regulations in Minnesota. The Minnesota State Legislators recently passed a law that increases the local sales and use tax rates for seven key metro counties. These counties include:
If you conduct business in any of these counties (meaning you have a taxable presence, or “nexus”), or if you ship taxable items to these counties, you will need to apply additional taxes to your sales. You should receive a notification by mail if you have had nexus in these counties previously. However, if you haven’t received a physical notice, you can check if you are affected by the tax changes by visiting your MN e-services account online.
The new local Sales and Use Tax rates (if applicable) are as follows:
- 0.25% for Metro Area Sales and Use Tax related to housing
- 0.75% for Metro Area Transportation Sales and Use Tax
Please note that these percentages apply to both sales and use taxes and are only relevant for sales and use tax accounts. If you only file use tax, these changes also apply to you. To break it down, for the housing tax, it’s a 0.25% increase in sales tax and a 0.25% increase in use tax.
The state maintains a website with comprehensive information on local sales tax changes, which you can access here: https://www.revenue.state.mn.us/local-sales-tax-information
This website includes a Sales Tax Rate Calculator. By entering your address details, it will provide you with your applicable sales tax rate for your location. Please be aware that, at the moment, this calculator only displays rates for the third quarter. It’s expected that the state will update the calculator to include rates for the fourth quarter in September.
Once you’ve determined that you need to apply these local sales and use tax changes to the sales tax you charge, please make sure to update your sales process accordingly, effective from October 1, 2023. Some sales systems automatically adjust for local sales tax changes. If you’re using such software, consider setting a reminder in your calendar to verify that the update has been implemented. For more detailed information about who is subject to these tax increases, please refer to the attached PDFs provided by the state.