General sales tax in Minnesota

Minnesota has a state-wide general sales tax and additional local option sales tax in selected communities.

The state general sales tax rate is now 6.5%. When it was first imposed in 1967, the rate was 3%. Then it increased several times to 6.5% in 1991. The 1991 change was unique because it started as an “optional” (but actually somewhat mandated) county sales tax rate of ½ percent on top of the 6 percent state rate (since 1983), which was imposed by all counties. In 1994, this “optional” tax was officially rolled into the state tax rate. Although Minnesota has one of the highest tax rates among the states, it also has one of the narrower tax bases because it exempts not only food but also clothing for home consumption.

In addition, local governments may be allowed by the State Legislature to institute local option sales taxes (LOST). St. Paul and Minneapolis each adopted a 0.5% LOST, and the Hennepin County adds an additional 0.15% to finance a new Minnesota Twins stadium. So the total rate in the city of Minneapolis is 7.15% and 6.65% in the rest of Hennepin County. An additional 1% sales tax is imposed in Duluth, bringing the total there to 7.5%.

It is worth noting that, unlike in many other states, Minnesota's LOST do not require the approval of public referenda. It can be adopted simply after a local government's proposal is approved by the state legislature. [Is this the case only for the Twin Cities area?]