1% metro sales and use tax increase
On May 25, 2023, a bill that included a 1% increase in sales tax in the 7-county metro area was signed into law. The increase is comprised of 0.75% Transportation tax and a 0.25% Housing tax. This sales tax increase became effective on October 1, 2023.
All contractors who work with the Metropolitan Council should be aware of the Minnesota Department of Revenue’s “transitional period” announcement establishing a 6-month period in which active contracts executed before October 1, 2023 are exempt from the 1% sales tax increase for a 6-month period that will end on April 1, 2024.
Guidelines for contractors:
- The transitional period’s effective date begins on October 1, 2023 and will terminate on April 1, 2024.
- The exemption is administered between the buyer (contractor) and seller (supplier), and it starts with the contractor submitting documentation proving a pre-existing contract to the seller.
- Contractors must provide sellers with a completed Form ST3, Certificate of Exemption, when they have a qualifying pre-existing bid or contract affected by a change in the tax rate.
- Contracts let after October 1, 2023, are not eligible for the exemption.
- Beyond April 1, 2024, contractors are no longer exempt from paying, and Suppliers are no longer exempt from collecting, the 1% sales tax increase.