Minnesota (MN) levies a 6.875% state sales tax, making it essential for businesses to understand collection and remittance obligations. As of 2026, the LLC filing fee is $155 with no annual franchise tax.
Economic Nexus in Minnesota
Remote sellers must collect Minnesota sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2019-10-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Minnesota Department of Revenue enforces these provisions and provides registration guidance at https://www.revenue.state.mn.us.
LLC Formation in Minnesota (2026)
Forming an LLC in Minnesota costs $155 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. Minnesota imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Minnesota Department of Revenue.
Key Tax Rules
• Minnesota has a 6.875% state sales tax rate.
• Local taxes can add up to 2%, with Minneapolis and St. Paul having additional transit taxes.
• Clothing and groceries are exempt from sales tax.
• Economic nexus: $100,000 in sales or 200 transactions.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Minnesota: groceries, clothing, prescription drugs, medical devices. Businesses should maintain proper documentation for exempt transactions.