Minnesota Sales Tax Guide for Selling Soft Drinks and Other Beverages

The following is the current (updated July 2023) Fact Sheet for Minnesota Sales Tax Guide for Soft Drinks and Other Beverages. The following post has been adopted from the Minnesota Department of Revenue’s Sales Tax Fact Sheet #102C, Soft Drinks and Other Beverages.

What’s New

Starting July 1, 2023, edible cannabinoid products are subject to the Cannabis Tax. See Cannabinoid Products.

Minnesota sales tax applies to the sale of soft drinks. The food product exemption does not apply to soft drinks.

Soft Drinks

Soft drinks are nonalcoholic beverages that contain natural or artificial sweeteners.

“Natural and artificial sweeteners” means an ingredient of a food product that adds a sugary sweetness to the taste of the
food product.

For sales tax purposes, beverage powders and concentrates are not considered soft drinks.

To determine if a beverage is a taxable soft drink, you must review the product label. The following table provides more information.

If the Product Label Includes the Following, the Drink Is Taxable

Note: This list is for reference only. It does not include all natural and artificial sweeteners or beverages.

Agave
Aspartame
Barley malt
Corn syrup
Dextrose
Evaporated cane juice
Fructose
Fruit juice concentrate
Honey
Invert sugar
Maltitol
Molasses
Rice syrup
Saccharin
Stevia
Sucralose
Sucrose
Other artificial or natural sweetener

Examples

Bottled or canned water that contains sweeteners
Coffee and tea drinks that contain sweeteners
Fruit ades, drinks, or nectars that contain sweeteners and have 50% or less fruit juice or no fruit juice percent shown on label
Kombucha tea
Nonalcoholic beer or near beer (contains barley malt)
Oral electrolyte drinks
Sports drinks
Soda pop
Sparkling grape juice containing sweeteners and 50% or less fruit juice

If the Product Label Includes the Following, the Drink Is Not Taxable (For Exceptions, See Additional Information)

Note: This list is for reference only. It does not include all natural and artificial sweeteners or beverages.

Milk or milk products
Soy, rice, or similar milk substitutes
More than 50% vegetable or fruit juice by volume, even if they contain sweeteners
No specific sweetener listed but lists natural flavor, essence, or spice

Examples

Apple cider
Beverage powders or concentrates
Bottled or canned water with no sweeteners
Coffee beans or grounds and tea leaves
Nutritional drinks that contain milk or milk substitutes
Milk and drinks that contain milk

Bottled Water

If no sweeteners are added, carbonated, non-carbonated, or flavored bottled water are generally not taxable (regardless of size).

Delivery charges for nontaxable water are also exempt.

However, bottled water is taxable when the seller provides straws or other eating utensils. For more information, see Prepared Food Fact Sheet.

Alcoholic Beverages

Alcoholic beverages are taxable. Alcoholic beverages contain 0.5% or more alcohol by volume.
Beer, wine, and liquor sold by a business with an intoxicating liquor license are subject to the general sales tax rate, liquor gross receipts tax, and any local taxes that apply. For more information, see the Eating Establishments Guide.

Nonalcoholic Beer

Nonalcoholic beer is a taxable soft drink because it contains sweeteners. These beverages are subject to the general sales tax rate and any applicable local taxes.

Additional Information

Any beverage listed as exempt in this fact sheet becomes taxable when it is served in a glass, cup, or pitcher.

For more information, see the Eating Establishments Guide.

Cannabinoid Products

Currently, edible cannabinoid products and nonintoxicating topical products are legal to sell in Minnesota.

Starting July 1, 2023, edible cannabinoid products are subject to the 10% Cannabis Tax. In addition to the Cannabis Tax, taxable cannabis products are subject to both:

6.875% state general rate sales tax
Any applicable local sales taxes based on where the transaction takes place
Nonintoxicating topical products are not subject to the 10% Cannabis Tax, but are subject to both:
6.875% state general rate sales tax
Any applicable local sales taxes based on where the transaction takes place

For more information, go to our website www.revenue.state.mn.us and type Cannabis Tax into the Search box.

Ice

Ice cubes, crushed ice, and ice blocks are not taxable. Dry ice is taxable.

Vending Machines

The only taxable food sold through vending machines is prepared food, soft drinks, candy, and dietary supplements.

For more information, see the Vending Machines and Other Coin-Operated Devices Guide

Legal References

Minnesota Statute 297A.61
- Subd. 32, Soft drinks
- Subd. 34, Taxable food sold through vending machines
Minnesota Rule 8130.4700, Prepared Food, Candy, and Soft Drinks

Fact Sheets

Candy
Dietary Supplements
Food and Food Ingredients
Prepared Food

Guides

Eating Establishments
Vending Machines and Other Coin-Operated Devices

Previous Minnesota Sales Tax Guide for Selling Soft Drinks and Other Beverages

The following is the prior Fact Sheet for Minnesota Sales Tax Guide for Selling Soft Drinks and Other Beverages. This has been superseded by the Fact Sheet above. This is preserved for historical purposes only.

This post been adopted from the Minnesota Department of Revenue’s Fact Sheet 102C, Soft Drinks and Other Beverages.

Soft drinks

Soft drinks are taxable. The exemption for food products does not apply to soft drinks. “Soft drinks” means nonalcoholic beverages in liquid form that contain natural or artificial sweeteners. “Sweeteners” includes corn syrup, dextrose, invert sugar, sucrose, fructose, fruit juice concentrates, molasses, evaporated cane juice, rice syrup, barley malt, honey, and artificial sweeteners. Soft drinks do not include beverages that contain milk or milk products; soy, rice, or similar milk substitutes; or greater than 50 percent vegetable or fruit juice by volume.

Product labels should be reviewed to determine if the product falls within the guidelines of a taxable soft drink.

Taxable soft drinks include the following:

bottled or canned water that contains sweeteners
coffee and tea drinks that contain sweeteners
fruit ades, drinks, or nectars that contain sweeteners and have 50 percent or less fruit juice or no fruit juice percent shown on label
nonalcoholic beer or near beer, such as O’Doul’s and Sharps (contains barley malt, a sweetener)
Pedialyte
sports drinks (Gatorade, Powerade, etc.)
soda pop
sparkling Catawba juice containing sweeteners and 50 percent or less fruit juice

Examples of nontaxable items:

apple cider
beverage powders or concentrates
bottled or canned water that does not contain sweeteners
coffee or tea beans, grounds, leaves, or powders
nutritional drinks that contain milk or milk substitutes
Frappuccino® (contains milk)
fruit or vegetable juices that contain more than 50 percent juice by volume even if they contain sweeteners
milk and drinks that contain milk

Bottled water

Unsweetened bottled water sold in any size container is exempt because it is a food product. This includes carbonated or non-carbonated water or flavored water if no sweetener is added. Delivery charges for non-taxable water are also exempt.

Bottled water is still taxable when sold through a vending machine or when the seller provides eating utensils.

Ice

Ice cubes, crushed ice, and ice blocks are not taxable. Dry ice is taxable because it is not intended for human consumption.

Alcoholic beverages

Beer and other alcoholic beverages are taxable. Alcoholic beverages are beverages that are suitable for human consumption and contain one-half of one percent or more of alcohol by volume. Beer, wine and liquor sold at an establishment licensed to sell any type of intoxicating liquor are subject to the general sales tax rate and any applicable local taxes. Vendors are also responsible for remitting the 2.5 percent gross receipts tax on sales of alcoholic beverages. For more information, refer to Fact Sheet 137, Restaurants and Bars.

Near beer, such as O’Doul’s and Sharps is a soft drink because it contains a sweetener (barley malt). Near beer products are subject to the general sales and use tax rate and any applicable local taxes.

Note: Any of the beverages listed as exempt become taxable when sold from vending machines or served in glasses, cups or pitchers.

Brand names are shown for illustration purposes only and do not imply sole representation in any category.

References

Fact sheets that may be of interest

Click here for more Minnesota Sales Tax Guides.

This post been adopted from the Minnesota Department of Revenue’s Fact Sheet 102C, Soft Drinks and Other Beverages.