Tax Structure

Washington County has the 3rd lowest property tax in the state. This is a significant advantage of businesses investing in a new headquarters, building a data center, opening another distribution facility or owning a building of any size. We encourage site selectors and executives to compare the cost of real estate in Washington County, along with the property taxes, the what is being paid in a different county or state. In most cases, a comparison will show that Washington County is the more affordable option.

Corporate Income Tax

Minnesota’s corporate income tax rate is 9.8%. In 2014, the state moved to a single sales apportionment, which makes Minnesota a top location for headquarters, plants and equipment that propel sales. Additionally, Minnesota does not have a throwback rule, which can reduce net taxable income.

Business Sales Tax Exemptions

Equipment, software and electricity for qualified data center operations for 20 years.

Capital equipment (before September 1, 2014, the tax is refunded for non-manufacturers), raw materials and utilities/fuels used in the industrial production process.

Non-Taxed Services

  • Advertising services
  • Custom software
  • Construction labor
  • Installation labor for exempt capital equipment
  • Repair of furniture and fixtures

Commercial and Industrial Property Tax

Minnesota exempts personal property, including machinery and inventory, from the property tax, which lowers the effective tax rate for real and personal property. Businesses with high equipment and inventory values relative to their real estate value pay a lower effective tax rate in Minnesota than in many other states.

Sales and Use Tax

Minnesota’s general sales tax rate is 6.875%. Local sales taxes are not imposed in most jurisdictions. There is also no sales tax on clothing, pharmaceuticals, or food used for home consumption.