In February 2024, the State of Minnesota approved a new “delivery fee” to be imposed on all transactions over $100. This $.50 per transaction “fee” is being implemented effective July 1, 2024 and is a component of a larger initiative aimed at funding transportation projects across the state.

Effective July 1, 2024, all retailers will be required to charge and collect a $.50 per transaction “delivery fee” for goods delivered in the state. This fee will be imposed upon all personal property that is currently subject to Minnesota sales tax. 

Retailers will report the number of delivery fees charged and collected on their Minnesota State Sales & Use Tax Filings.

What is subject to the Minnesota retail delivery fee?

The 50-cent retail delivery fee applies to most retail sales of tangible personal property that are: 

1. delivered in Minnesota, 
2. subject to Minnesota sales tax, and 
3. have a retail price of $100 or more before the application of state and local sales and use taxes.

Although most clothing is exempt from Minnesota sales tax, clothing priced at $100 or more is subject to the “fee”.

What transactions are exempt from the Minnesota retail delivery fee?

The Minnesota retail delivery fee does not apply to retail deliveries of:

• Accessories and supplies required for the effective use of durable medical equipment for home use 
• Adult and child diapers, both cloth and disposable
• Baby products (baby bottles and nipples, baby swings, baby wipes, breast pumps, bottle sterilizers, car seats and car seat bases, changing pads and tables, cribs and bassinets, crib and bassinet mattresses and sheets, infant eating utensils, infant syringes, pacifiers, strollers, teething rings)
• Drugs and medical devices 
• Food, food ingredients, or prepared food 
• Tangible personal property with a retail price of less than $100

Additionally, the fee does not apply to retail deliveries:

• Made to a purchaser who is exempt from Minnesota sales tax 
• Made via a motor vehicle for which a permit issued by the commissioner of transportation or a road authority is required under Chapter 169 or Chapter 221, provided the retailer has proof that the delivery was made by a qualifying vehicle
• Resulting from a retail sale by a food and beverage service establishment (e.g., a restaurant), regardless of whether the delivery is made by the retailer or a third-party delivery service.

Do retailers have to collect the retail delivery fee from customers?

No. Retailers may collect the retail delivery fee from customers, but they’re not required to. They can pay the fee themselves.

Does the retail delivery fee apply to each transaction or each delivery?

The retail delivery fee is imposed once per qualifying transaction, no matter how many deliveries result from that transaction.

Does the retail delivery fee have to be separately stated?

If the retailer collects the retail delivery fee from their customer, they must:

• Charge the fee in addition to any other delivery fee
• Separately state the fee on the bill of sale, invoice, receipt, or similar document

However, if the retailer pays the retail delivery fee themself and does not collect it from the consumer, the fee does not need to be separately stated on the invoice.

Is the retail delivery fee subject to Minnesota sales tax?

It depends. If the retail delivery fee is separately stated on the invoice, bill of sale, or similar document, the fee is not subject to sales tax. However, if the retailer includes the delivery fee in the sale price (i.e., does not separately state it), the fee is subject to sales tax.

How do you register for the Minnesota retail delivery fee?

All retailers already remitting sales and use taxes to the State of Minnesota will be registered for Retail Delivery Fee tax line. If you are not registered for the tax line, you must log in to your e-Services account and add the Retail Delivery Fee tax line. 

How do you report the Minnesota retail delivery fee?

Retailers must report the retail delivery fee on the Minnesota sales and use tax return’s new Retail Delivery Fee tax line. You will report the total collected or the amount due for the Retail Delivery Fee on each return and may use one return for all business locations.

Are out-of-state sellers subject to Minnesota’s retail delivery fee?

The retail delivery fee applies to out-of-state retailers as well as retailers maintaining a place of business in the state so long as the out-of-state seller has an obligation to collect and remit Minnesota Sales Tax.