Minnesota Prairie Roots

Writing and photography by Audrey Kletscher Helbling

A lesson in Minnesota sales taxes April 4, 2011

Filed under: Uncategorized — Audrey Kletscher Helbling @ 7:09 AM
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How much does your community tax purchases?

“ARE YOU A SEVEN?” she asked.

“What?” I asked her to repeat what she’d just told me over the phone.

“Are you a seven?” she repeated.

Still, I didn’t understand. Then she—the saleswoman at J.C. Penney in the Burnsville Shopping Center—explained that sales tax rates vary, depending on where you live in Minnesota. She wondered if I lived in an area with a seven percent rate.

Huh? I had no idea, about the rate or that such differences existed.

I live in Faribault. Is that a “seven,” or some other number?

The helpful saleswoman, who was trying to calculate the cost of pleated shades (which I’m not buying because they are way too costly at nearly $400 for two windows, but which I really, really want), was confusing me. Apparently orders shipped to my home would be taxed based on where I live, or something like that.

Not one to simply let this piece of information slip through the recesses of my brain, I googled “Minnesota sales tax” and ended up on the Minnesota Department of Revenue sales tax rate calculator website. It’s an easy-to-use site where I could type in Minnesota zip codes, a dollar amount and, zip, the sales tax rate appeared. The calculator covers Minnesota and local general sales and use taxes. Any other special taxes, such as those on entertainment, liquor, dining and lodging, are not figured into the totals.

First, I needed the nine-digit zip codes for my sample towns. Once I had those zip codes from a U.S. Postal Service link, I typed the numbers and my sample dollar amount of $10 into the tax calculator website.

I quickly discovered that Faribault is not a seven. Our sales tax rate, like that of my brother who lives in Redwood County in rural southwestern Minnesota, is 6.875 percent. We would each pay 69 cents in sales tax on a qualifying $10 purchase in our parts of Minnesota. We have no extra taxes, just the 6.875 state-wide basic sales tax levied by the state.

My daughter who lives an hour away from me in south Minneapolis, however, will pay more for purchases made in her area. The sales tax rate for her address is 7.775 percent. That breaks down to the standard state sales tax rate, plus an additional 0.15 percent levied by Hennepin County, 0.5 percent by the city of Minneapolis and 0.25 percent for Transit Improvement. She would pay 78 cents in taxes on a $10 purchase.

In Woodbury, where my youngest brother and his family live, a 0.25 percent Transit Improvement levy is also in place. It’s the only extra sales tax in that city, so tax on a $10 purchase there would be 71 cents.

I was surprised to learn that St. Cloud also has an extra tax, of 0.5 percent, pushing the sales tax rate there to 7.375 percent. That helped pay for an airport and other projects. You’d pay 74 cents sales tax on a $10 purchase.

But my biggest surprise came when I typed in a friends’ nine-digit zip code up in Duluth. There the local government has imposed a one percent additional general sales tax, pushing the sales tax in that port city to 7.875 percent. The tax on a $10 purchase is 79 cents. Authorized in 1973, that special tax “may be used for any city purpose, as determined by the city council.” It has no expiration date and is the longest-running local sales tax listed on a September 2010 document from the Minnesota House of Representatives Research Department.

Now, if you’re like me, you’ve just gotten a good basic education on sales tax rates in Minnesota.

Funny, isn’t it, how that J.C. Penney employee’s seemingly simple question—“Are you a seven?”—educated me about sales tax rates in Minnesota.

THE MINNESOTA LEGISLATURE is considering legislation that would loosen current restrictions on local sales taxes. Under the proposal, cities or groups of cities could impose local sales taxes with local voter approval. Twenty-two Minnesota cities currently have a local option sales tax.

© Copyright 2011 Audrey Kletscher Helbling


4 Responses to “A lesson in Minnesota sales taxes”

  1. Bernie Says:

    Montana doesn’t have sales tax. Only a lodging tax of I think 6% but don’t quote me. The resort towns have sales tax, Yellowstone Park, Red Lodge and so on.
    I always forget about the sales tax when I go home. Thanks for posting Duluth’s. I was reading and hoping you would mention it. I was not aware that different parts of the state had different tax. I assumed it was all the same across the board. I learned something new today.

    • Audrey Kletscher Helbling Says:

      A lesson in Minnesota sales tax 101. It’s a hot button topic right now. Certainly not the most interesting, but it will be if this legislation passes and voters approve local sales taxes to replace reduced state funding.

  2. Louis Johnston Says:

    Thanks for writing this piece; I saw it in MinnPost. This is an important topic that needs to be addressed. Please see my piece in the Minnesota Journal, available here: http://www.citizensleague.org/publications/journal/archives/Journal_3-03.pdf (the article starts on p. 5).

    • Audrey Kletscher Helbling Says:

      Interestingly enough, I wrote this post probably a month or more ago, long before I was aware of any pending legislation on this issue. I thought at the time, who would be interested in reading about this. Thankfully I did not delete the post from my drafts.

      I checked out your article. It was packed with valuable information, so, readers, please check it out.

      I remember nearly 30 years ago when I worked as a check-out clerk at a grocery store how confusing it was to remember what should be taxed and what shouldn’t be.

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