Minnesota sales tax for online sellers: nexus, permit and filing

What is the Minnesota sales tax rate?

The state rate is 6.875%. Cities, counties and transit districts add their own taxes, so combined rates in the Minneapolis and Saint Paul area are among the highest in the state, up to nearly 10%. Tax is charged at the rate for the delivery address. Clothing and most groceries are exempt, and software accessed online is generally not taxed.

When does an online seller have to collect in Minnesota?

Minnesota calls its rule the small seller exception. A remote seller does not have to collect unless, in the previous 12 months, it shipped more than $100,000 of retail sales into Minnesota or made 200 or more retail sales there. Either test ends the exception. Taxable and exempt retail sales both count, and guidance indicates that sales made through marketplaces are included. A physical presence, such as staff, an office or inventory, creates nexus whatever the figures.

How nexus works in general is covered in physical vs economic nexus and economic nexus explained.

What if you sell on Amazon, eBay or Etsy?

Minnesota requires marketplace facilitators to collect and remit sales tax on the sales they facilitate, so you do not collect on those orders. Your own website and other direct channels remain your responsibility. See marketplace facilitator laws.

How do you register?

Register online through e-Services, the Department of Revenue's portal, for a Minnesota tax ID and a sales and use tax account. There is no fee. Minnesota is a member of the Streamlined Sales Tax agreement, so you can also register through the Streamlined system. See Streamlined Sales Tax registration.

What are the steps once you have nexus?

1. Confirm nexus

   Check your presence and your sales into Minnesota against its threshold.

2. Register before collecting

   With the Minnesota tax agency, as set out above.

3. Set up your store

   Charge the correct combined rate for each delivery address and product.

4. File and pay

   On the schedule Minnesota assigns, including zero returns where required.

How are returns filed?

Returns are filed through e-Services and are due by the 20th of the month after the period. The Department assigns monthly, quarterly or annual filing based on the tax you collect. One return covers state and local taxes.

See how to file a sales tax return.

What is the Minnesota retail delivery fee?

A 50-cent fee, in force since July 1, 2024, on each retail delivery in Minnesota where the taxable goods come to $100 or more. It is charged once per transaction, however many packages are sent. Retailers with less than $1,000,000 of Minnesota retail sales in the previous calendar year are exempt, so most small online sellers do not charge it. Larger sellers can show it as a separate line on the invoice or pay it themselves, and report it with their sales tax through e-Services.

How does the 12-month test work?

Minnesota does not use the calendar year. Check your Minnesota retail sales and order count for the previous 12 months regularly, for example at the end of each quarter. A seller of $25 items passes the 200-sale test after $5,000 of sales, long before the dollar test, so sellers of low-priced goods should watch the order count closely.

What else should sellers know?

• Sellers outside the US: the same rules apply wherever the business is based. See selling on Amazon US as a non-resident.
• Late registration: tax you should have collected becomes your own debt. See voluntary disclosure agreements and collected but not remitted.
• Records: keep sales by delivery address, tax collected and any certificates. See exemption certificates and sales tax audits.
• Stopping: returns stay due until the account is closed. See filing frequency and cancelling a sales tax permit.
• Store settings: switch on collection only once you are registered. See Shopify sales tax setup.

This guide is general information. It is not tax or legal advice for your situation.