Minnesota Local Sales Tax Hikes Coming in October

August 15, 2023 Last Edit: June 5, 2025

Twin Cities & Fergus Falls Sales Tax Hikes Take Effect October 1, 2023.

Minnesota Local Sales Tax Hikes Coming in October

The Minnesota Department of Revenue recently published three Local Sales Tax Notices for taxes taking effect on October 1: 1) .25% Metro Area Sales & Use Tax for Housing Programs. Read more: Metro Area Sales and Use Tax for Housing 2) .75% Metro Area Sales & Use Tax for Transportation Funding. Read more: Metro Area Transportation Sales and Use Tax 3) .5% Fergus Falls Sales & Use Tax. Read more: Fergus Falls Sales and Use Tax. Check out the complete list of MN Revenue Local Sales Tax Notices: Local Sales Tax Notices. Where does the money from the Metro Area Sales Taxes go? The combined 1% Metro Area Sales Tax increase means small businesses, consumers, and others will pay about $2.8 billion more over the next four years. The Metro Area Sales Tax hike was included in the final budget deal as part of offsetting an irresponsible $20 billion increase in state spending under the budget agreed to by Governor Walz and Democratic legislative leaders in May. The new two-year budget is 40% larger than the previous budget. The .25% sales tax for housing will be used as follows: – 25% for rental assistance programs – 25% for a county housing assistance program – 50% for a city housing assistance program Eligible projects under the county and city housing programs include rental assistance for those making les than 80% of the area median income, financial support to nonprofit housing providers, and support for the construction of affordable owned and rental housing. The .75% sales tax for transportation will be used as follows: – 83% for transit (bus, light rail) in metro area – 17% for various metro area transportation funds (county aid, small and large city aid, town roads, etc.) The transportation sales tax will likely breathe new life into light rail planning in the Twin Cities, meaning more empty trains to nowhere instead of improved and modernized roads.

Topics:

Taxes

State:

Minnesota

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