Local Option Sales Tax

  1. What is it?
  2. How much is it?
  3. Why is it needed?
  4. How much does it generate?
  5. What will it be used for?

The tax is generally referred to as the Local Option Sales Tax. This taxing authority is granted to counties in State Statute (297A.993). According to law, counties may implement a sales and use tax of up to 0.5% and include a vehicle excise tax of up to $20 per vehicle. The funds can only be used on projects designated by the County Board. 

To do so requires a public hearing at which the public may submit input and comments. After the public hearing is closed, the County Board may implement the tax by enacting a resolution. Washington County held an initial public hearing to enact a 0.25% sales and use tax to be used for just transit projects. The public hearing period was for 15 days in June 2017. In 2021, the County Board wanted to increase the sales and use tax to 0.5% and expand the list of projects to roadways. The public hearing period for the increase was for 15 days June 15th, 2021. After closing the public hearing, the board voted to increase the sales and use tax from a rate of 0.25% to 0.5% and to retain the $20 vehicle excise tax.    

An ever growing list of counties in Minnesota have implemented a local option sales tax. A summary of how many Minnesota counties impose 0.25% and 0.5% can be found here.