Minnesota Sales & Use Tax
The state of Minnesota sales tax, is currently at 6.85%, as well some local governments also have applicable local sales tax up to 1.5% in addition to the state tax; making it the third highest state sales tax rate. The lowest tax rate in the state is 6.875%, while the highest tax rate is equivalent to 8.875%. Minnesota is said to have a relatively simple sales tax rate and a flat state tax rate. The state’s general funds makes up one part of the Minnesota tax and the arts and environmental soaks up the remainder of the taxes. As previously mentioned not only is there a state tax, additionally there are local and county taxes. Another variable is calculating the tax is the jurisdiction or county you reside in (see table above).
The sales tax rate is determined by the location of the purchaser or buyer at the conclusion of the sale or transaction; which makes Minnesota a destination-based sales tax state. For instance, with the advent of the internet, purchases made via the internet or mail within the state (both the buyer and vendor); the vendor has the responsibility of collecting all applicable taxes (state and local taxes). NOTE: taxes will vary somewhat again dependent on county.
With the state making continuous and important steps to simplify the state’s sales tax rules and administration process classifies Minnesota as a member of the Streamlined Sales and Use Tax Agreement.
Minnesota as do the majority of the other states have similar definitions of what is taxable and what is not and the states while some things maybe alike there are a lot of things that are not. Simply put, Minnesota legally requires any/all tangible physical goods to be assessed a sales tax that is being sold to a customer. A few exceptions include but is not limited to baby products, clothing as well as over the counter medication.
For the most part services in Minnesota are not really viewed as taxable, most services are exempt from tax but there are some exceptions.
Relatively straight forward and very simple as it pertains to sales tax application to shipping and handling. If the item being shipped is considered taxable then shipping and handling tax will be applied but on the other hand if the item being shipped is not taxable then there will be no sales tax applied for shipping and handling. For shipments containing both taxable and non-taxable items, a portion of the shipment will incur shipping and handling tax according to the weight of the taxable item.
Lastly, as it pertains to whether or not drop shipments being subject to sales tax; the state of Minnesota usually does apply state sales taxes to drop shipments.