Minnesota Sales Tax Guide for SaaS and E-Commerce Businesses 2025
Minnesota imposes a 6.875% statewide sales and use tax. Local sales taxes may also apply based on the buyer’s location. The state taxes most tangible goods and many digital products. Subscriptions to online hosted software are not taxable.
This guide explains how SaaS companies and e-commerce sellers are taxed in Minnesota, including nexus rules, marketplace provider obligations, filing deadlines, and registration.
Last updated: October 2025
Quick Reference: Minnesota Sales and Use Tax 2025
| Topic | Details |
|---|---|
| Statewide sales tax rate | 6.875% (Taxes and Rates) |
| Local rates | Vary by city and county. Use the Sales Tax Rate Calculator |
| Economic nexus threshold | $100,000 in retail sales or 200 retail sales shipped to Minnesota in the prior 12 months (Remote Seller FAQs) |
| Is SaaS taxable? | No. Subscriptions to online hosted software are not taxable (Computer Software and Digital Products guide) |
| Filing due date | 20th day of the month following the reporting period (Filing Due Dates) |
| Registration portal | Registering Your Business |
| Tax agency | Minnesota Department of Revenue – Sales and Use Tax |
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SaaS and Digital Products in Minnesota
Online hosted software is software accessed over the internet and hosted by a provider. Subscriptions to use online hosted software are not taxable. Charges for maintenance or upgrades to online hosted software are not taxable.
Prewritten computer software is taxable whether delivered on a disk or by download. Custom software is not taxable.
Digital products like e-books, digital audio, and digital video are taxable. Some digital items are not taxable, such as access to digital news articles and charts.
Sources:
E-Commerce and Tangible Goods in Minnesota
| Category | Taxable | Notes |
|---|---|---|
| Tangible goods | Yes | Sales of tangible personal property are taxable unless exempt. |
| SaaS | No | Online hosted software subscriptions are not taxable. |
| Prewritten software | Yes | Taxable whether delivered electronically or on tangible media. |
| Custom software | No | Exempt if created for one purchaser. |
| Digital products | Yes | Downloads and streaming of specified digital products are taxable. |
Minnesota uses destination-based sourcing. Use the delivery location to determine the rate. For digital products, source to the purchaser address on file.
Sources:
Economic Nexus: Remote Seller Rules
Remote sellers must register and collect Minnesota sales tax if, over the prior 12 months, they have:
- More than $100,000 in retail sales shipped to Minnesota, or
- 200 or more retail sales shipped to Minnesota.
Include both taxable and exempt retail sales when measuring the threshold. Begin collecting by the first day of a month no later than 60 days after crossing the threshold.
Source: Sales Tax FAQs for Remote Sellers
Marketplace Provider Rules
Marketplace providers must collect and remit Minnesota sales tax if, over the prior 12 months, they have:
- More than $100,000 in retail sales shipped to Minnesota, or
- 200 or more retail sales shipped to Minnesota.
Keep records and exemption certificates. Registration can be through Minnesota or Streamlined Sales Tax.
Source: Sales Tax for Marketplace Providers
Filing and Due Dates
- File online in e-Services or go directly to the e-Services login
- Filing frequency is based on liability: monthly, quarterly, or annual
- Due date: 20th of the month after the reporting period
- File zero returns when you have no taxable sales
Penalties and Compliance Notes
- Late filing penalty: 5% of unpaid tax
- Late payment penalty: 5% to 15% depending on days late
- Interest accrues on unpaid tax and penalties
- Keep records of invoices, contracts, and exemption certificates
See: Penalties and Interest for Businesses
FAQs: Minnesota Sales Tax for SaaS and E-Commerce
Is SaaS taxable in Minnesota?
No. Subscriptions to online hosted software are not taxable.
Is custom software taxable?
No. Custom software for a single purchaser is not taxable.
Is prewritten software taxable if downloaded?
Yes. Prewritten software is taxable no matter how delivered.
Are digital goods like e-books and streaming taxable?
Yes. Specified digital products are taxable.
What is the economic nexus threshold?
More than $100,000 in retail sales or 200 retail sales in a 12-month period.
Do marketplace providers have to collect?
Yes. Marketplace providers must collect once they cross the threshold.
Does Minnesota have local sales tax?
Yes. Local taxes apply in many areas. Use the Sales Tax Rate Calculator.
Official Minnesota Resources
- Sales and Use Tax overview
- Taxes and Rates
- Sales Tax Rate Calculator
- Computer Software and Digital Products guide
- Digital Products
- Sales Tax FAQs for Remote Sellers
- Sales Tax for Marketplace Providers
- Registering Your Business
- e-Services for Sales and Use Tax
- e-Services login
- Local Sales Tax Information
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