UPDATE: AS OF OCTOBER 1, 2023, SALES TAX RATE HAS INCREASED 1% AT MALL OF AMERICA. TOTAL COMBINED TAX RATE IS NOW 8.525%!
I get asked this question all the time. Many people believe the Mall of America in Bloomington, Minnesota (suburban Minneapolis/St. Paul) offers tax-free shopping at stores and restaurants. The short answer is “no.”
Sales at the Mall of America are subject to a sales tax rate of 8.525%. This breaks down as follows: 6.875% Minnesota state sales tax, 1.00% metro transit sales tax (up from .25%), new .25% “affordable housing” tax, and .40% Hennepin County sales tax which funds the Minnesota Twins stadium and Target Field. In addition, alcoholic beverages are subject to an additional 5.5% tax: 2.5% additional Minnesota state sales tax on liquor, plus a 3% “drink tax” which is levied by the City of Bloomington.
The myth about the Mall of America being tax-free likely stems from the fact that sales of clothing and footwear are exempt from all state and local sales taxes. This is true everywhere in Minnesota, not just at MOA. There is no dollar limit on this exemption: a $2 pair of socks and a $1,000 custom tailored suit are both free of tax. Since all surrounding states and Canadian provinces tax both clothes and shoes, the Mall of America becomes an attractive regional shopping destination. This is especially true during July and August for back to school shopping, then again in November and December for Christmas and holiday shopping.
Groceries are also exempt from sales tax in Minnesota. This can get tricky, however. Candy and soda pop are taxed, as are all restaurant meals. Legally, the tax applies to “prepared” foods. So, if you buy a frozen burrito from a convenience store, it is not taxed. But if you heat it up in the microwave before leaving the store, it is then “prepared” and thus subject to sales tax. Candy is taxed while cookies are not. Here’s my favorite: if you buy vegetables in a grocery store, they are not taxed. But if you purchase those same vegetables from the store’s salad bar and use them to make yourself a salad, it is then considered “prepared food” and subject to sales tax. Confused? Me too!
Back to tax free shopping at the Mall of America: the general rule to remember is that clothes and shoes are not taxed. Everything else is. Have a great time and enjoy your Twin Cities shopping vacation!