Minneapolis Sales Tax Guide for Businesses in 2025

No matter where you live or where your online business is based — if you have customers in Minneapolis, you must follow city and local sales tax rules in addition to Minnesota’s rules. That’s what this guide is for! This guide includes everything you need to know about digital tax laws in Minneapolis, whether your customers live in Audubon Park or Linden Hills.

Minneapolis Tax Jurisdiction Breakdown for 2025

• Minnesota State Sales Tax: 6.875%
• Hennepin County Sales Tax: 0.15%
• Minneapolis City Sales Tax: 0.5%
• Hennepin County Transit: 0.5%
• Metro Area Transportation: 0.75%
• Metro Area Tax for Housing: 0.25%

What is the sales tax rate in Minneapolis, Minnesota?

The minimum combined 2025 sales tax rate for Minneapolis, Minnesota is 9.025%. This is the total of state, county and city sales tax rates. The Minnesota sales tax rate is currently 6.875%. The Hennepin County sales tax rate is 0.15% and the Hennepin County Transit tax is 0.5%. The Minneapolis sales tax rate is 0.5%. The Metro Area Transportation tax is 0.75% and the Metro Area Tax for Housing is 0.25%.

These rates go for standard taxable products. But other rates might apply to your business.

If you’re selling “vice” products like tobacco or alcohol, you might have an increased rate. If you’re selling essential items, such as medicine or clothing, or educational materials, you might have an exempt or reduced rate. More on that next!

What products are exempt from Minneapolis sales tax rate?

• Clothing for general use, see Clothing
• Food (grocery items), see Food and Food Ingredients
• Prescription and over-the-counter drugs for humans, see Drugs

What digital products are taxed in Minneapolis?

First, let’s confirm what you’re trying to sell in Minneapolis. Are you selling digital products?

A digital product is any product that’s stored, delivered, and used in an electronic format. These are goods or services that the customer receives via email, by downloading them from the Internet, or through logging into a website.

You’re probably consuming and using digital products all day long, whether or not you realize it. Here are some common ones on the market today:

• E-books, images, movies, and videos, whether buying a copy from Shopify or using a service like Netflix. In tax language, these products are in a category usually called, “Audio, visual, or audio-visual products.”
• Downloadable and streaming music, whether buying an MP3 or using a service like SoundCloud or Spotify. Of course, these products also fall in the audio category.
• Cloud-based software and as-a-Service products, such as Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), and Infrastructure-as-a-Service (IaaS).
• Websites, site hosting services, and internet service providers.
• Online ads and affiliate marketing. Income from these services can be considered taxable under digital tax policies.

Some US states can have more specific definitions or exceptions. In Minneapolis, the sales tax exemptions related to digital products include:

• Access to digital news articles
• Charts and graphs
• Digital photos and drawings
• Logos and designs
• Textbooks and Instructional Materials (if for course of study)
• Some webinars (If admission to in-person presentation is not taxable, online participants and presenters can interact during the presentation, and interaction limits are the same for online and in-person participants)

How does Minneapolis sales tax compare to the rest of Minnesota?

Minneapolis’s combined sales tax rate of 9.025% is significantly higher than the state average, exceeding Minnesota’s typical range of 6.875% to 8.375%. This reflects the city’s approach to addressing local issues and funding city services through the sales tax system.

Learn more about sales tax rules state-wide in this business guide to sales tax in Minnesota.

What creates sales tax nexus in Minneapolis?

Since Minneapolis is located in Minnesota, it follows the same state-level sales tax nexus rules. Forms of Minnesota state sales tax nexus include:

• Economic nexus: When a business has more than $100,000 in retail sales or completes 200 or more separate sales transactions in Minnesota during the previous 12 months. More on that below!
• Physical location: This could be an office or a warehouse holding your inventory.
• Employee location: If you have an employee or any other type of representation based in a particular state or city, your business must register for sales tax there.
• Affiliate nexus: If you rely on in-state businesses to promote and refer your business, and you receive a substantial amount of income through these affiliates, then you have sales tax nexus.
• Trade Shows: If you attend a convention or trade show in Minnesota and make even one sale, you might be liable for sales tax.

Minneapolis economic nexus as a remote seller

If your business is fully located outside of Minnesota, then economic nexus is your main concern. Here’s how it works. The economic threshold amount refers to your total sales in the whole state, during the prior 12-month period

Basically, if your annual sales in Minnesota remain below $100,000 and you completed less than 200 transactions, then you don’t need to worry about sales tax at all. Phew!

But once your sales do surpass $100,000 or 200 transactions, then you must register for sales tax and comply with all of the Minnesota rules around tax rate and collection, invoices, and filing returns.

Who needs a seller’s permit in Minneapolis?

Any business with sales tax nexus, according to the rules above, must apply for a seller’s permit in Minnesota right away.

The seller’s permit comes with a sales tax registration number, which establishes you in the Minnesota tax system as a legal business. This number tracks your business through the system: the taxes you pay, the tax credits you receive, plus the tax you charge from customers.

How to get a seller’s permit in Minneapolis

So, it turns out you do need to register for tax in Minneapolis. Don’t worry! Just follow these instructions on how to register for sales tax in Minnesota and that will cover you across the state.

How to calculate Minneapolis sales tax?

Once you’re registered for taxes, you’re expected to apply sales tax to every taxable sale to a Minneapolis resident. That means 9.025% for most products.

If your customer is a fellow business, and they’ve provided a valid sales tax exemption certificate, then adding and collecting tax isn’t necessary.

How to collect sales tax in Minneapolis

Tax-compliant receipts in Minneapolis

In order to comply with tax laws, you should include the following information on your receipts or invoices to customers in Minneapolis:

• Your business’ name and address
• Your business’ sales tax registration number
• Invoice date
• Invoice sequencing number
• Buyer’s name and address
• Buyer’s sales tax registration number, if they have one.
• Sales tax (amount and rate) applied to each item
• Final amount after tax is added

The easiest solution for the sales tax receipt would be to use a sales tax software that automatically generates and sends all invoices (as soon as the sale is complete), and also stores them in the cloud for you.

Quaderno provides automatic tax invoicing for every transaction. The app sends tax-compliant receipts, invoices, and credit notes automatically, on the spot. You can also set up recurring invoicing. In fact, Quaderno helps automate many other parts of tax compliance, from adding the correct tax rate calculations to your sales to providing instant reports for filing returns. Give it a try for free.

How to file and pay sales tax in Minneapolis

Charging and collecting tax is only the first half of staying compliant. The second half is filing returns and paying whatever you might owe to the government.

Frequency for filing sales tax returns in Minnesota:

• Businesses selling less than $100 per month must file annually.
• Businesses selling ​$100 to $500 per month must file quarterly.
• Businesses selling more than $500 per month must file monthly.

Minnesota sales tax returns are due on the 20th day of the month following the end of the reporting period for quarterly and monthly filers. They are due on February 5th of the following year for annual filers. If the due date falls on a weekend or holiday, then your sales tax filing is generally due the next business day.

You can usually file and pay online! Check out more instructions on how to file sales tax in Minnesota.