1.1 A bill for an act
1.2 relating to taxation; sales and use; providing an exemption for dietary supplements;
1.3 amending Minnesota Statutes 2024, sections 297A.61, subdivisions 3, 38; 297A.67,
1.4 subdivision 2, by adding a subdivision.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. Minnesota Statutes 2024, section 297A.61, subdivision 3, is amended to read:
1.7 Subd. 3.Sale and purchase.(a) "Sale" and "purchase" include, but are not limited to,
1.8each of the transactions listed in this subdivision. In applying the provisions of this chapter,
1.9the terms "tangible personal property" and "retail sale" include the taxable services listed
1.10in paragraph (g), clause (6), items (i) to (vi) and (viii), and the provision of these taxable
1.11services, unless specifically provided otherwise. Services performed by an employee for
1.12an employer are not taxable. Services performed by a partnership or association for another
1.13partnership or association are not taxable if one of the entities owns or controls more than
1.1480 percent of the voting power of the equity interest in the other entity. Services performed
1.15between members of an affiliated group of corporations are not taxable. For purposes of
1.16the preceding sentence, "affiliated group of corporations" means those entities that would
1.17be classified as members of an affiliated group as defined under United States Code, title
1.1826, section 1504, disregarding the exclusions in section 1504(b).
1.19 (b) Sale and purchase include:
1.20 (1) any transfer of title or possession, or both, of tangible personal property, whether
1.21absolutely or conditionally, for a consideration in money or by exchange or barter; and
1Section 1.
REVISOR EAP/HL 25-0484703/18/25
State of Minnesota
This Document can be made available
in alternative formats upon request
HOUSE OF REPRESENTATIVES
H. F. No. 2794
NINETY-FOURTH SESSION
Authored by Rymer, Van Binsbergen, Knudsen, Davis, Zeleznikar and others03/26/2025
The bill was read for the first time and referred to the Committee on Taxes 2.1 (2) the leasing of or the granting of a license to use or consume, for a consideration in
2.2money or by exchange or barter, tangible personal property, other than a manufactured
2.3home used for residential purposes for a continuous period of 30 days or more.
2.4 (c) Sale and purchase include the production, fabrication, printing, or processing of
2.5tangible personal property for a consideration for consumers who furnish either directly or
2.6indirectly the materials used in the production, fabrication, printing, or processing.
2.7 (d) Sale and purchase include the preparing for a consideration of food. Notwithstanding
2.8section 297A.67, subdivision 2, taxable food includes, but is not limited to, the following:
2.9 (1) prepared food sold by the retailer;
2.10 (2) soft drinks; and
2.11 (3) candy; and.
2.12 (4) dietary supplements.
2.13 (e) A sale and a purchase includes the furnishing for a consideration of electricity, gas,
2.14water, or steam for use or consumption within this state.
2.15 (f) A sale and a purchase includes the transfer for a consideration of prewritten computer
2.16software whether delivered electronically, by load and leave, or otherwise.
2.17 (g) A sale and a purchase includes the furnishing for a consideration of the following
2.18services:
2.19 (1) the privilege of admission to places of amusement, recreational areas, or athletic
2.20events, and the making available of amusement devices, tanning facilities, reducing salons,
2.21steam baths, health clubs, and spas or athletic facilities;
2.22 (2) lodging and related services by a hotel, rooming house, resort, campground, motel,
2.23or trailer camp, including furnishing the guest of the facility with access to telecommunication
2.24services, and the granting of any similar license to use real property in a specific facility,
2.25other than the renting or leasing of it for a continuous period of 30 days or more under an
2.26enforceable written agreement that may not be terminated without prior notice and including
2.27accommodations intermediary services provided in connection with other services provided
2.28under this clause;
2.29 (3) nonresidential parking services, whether on a contractual, hourly, or other periodic
2.30basis, except for parking at a meter;
2.31 (4) the granting of membership in a club, association, or other organization if:
2Section 1.
REVISOR EAP/HL 25-0484703/18/25 3.1 (i) the club, association, or other organization makes available for the use of its members
3.2sports and athletic facilities, without regard to whether a separate charge is assessed for use
3.3of the facilities; and
3.4 (ii) use of the sports and athletic facility is not made available to the general public on
3.5the same basis as it is made available to members.
3.6Granting of membership means both onetime initiation fees and periodic membership dues.
3.7Sports and athletic facilities include golf courses; tennis, racquetball, handball, and squash
3.8courts; basketball and volleyball facilities; running tracks; exercise equipment; swimming
3.9pools; and other similar athletic or sports facilities;
3.10 (5) delivery of aggregate materials by a third party, excluding delivery of aggregate
3.11material used in road construction; and delivery of concrete block by a third party if the
3.12delivery would be subject to the sales tax if provided by the seller of the concrete block.
3.13For purposes of this clause, "road construction" means construction of:
3.14 (i) public roads;
3.15 (ii) cartways; and
3.16 (iii) private roads in townships located outside of the seven-county metropolitan area
3.17up to the point of the emergency response location sign; and
3.18 (6) services as provided in this clause:
3.19 (i) laundry and dry cleaning services including cleaning, pressing, repairing, altering,
3.20and storing clothes, linen services and supply, cleaning and blocking hats, and carpet,
3.21drapery, upholstery, and industrial cleaning. Laundry and dry cleaning services do not
3.22include services provided by coin operated facilities operated by the customer;
3.23 (ii) motor vehicle washing, waxing, and cleaning services, including services provided
3.24by coin operated facilities operated by the customer, and rustproofing, undercoating, and
3.25towing of motor vehicles;
3.26 (iii) building and residential cleaning, maintenance, and disinfecting services and pest
3.27control and exterminating services;
3.28 (iv) detective, security, burglar, fire alarm, and armored car services; but not including
3.29services performed within the jurisdiction they serve by off-duty licensed peace officers as
3.30defined in section 626.84, subdivision 1, or services provided by a nonprofit organization
3.31or any organization at the direction of a county for monitoring and electronic surveillance
3Section 1.
REVISOR EAP/HL 25-0484703/18/25 4.1of persons placed on in-home detention pursuant to court order or under the direction of the
4.2Minnesota Department of Corrections;
4.3 (v) pet grooming services;
4.4 (vi) lawn care, fertilizing, mowing, spraying and sprigging services; garden planting
4.5and maintenance; tree, bush, and shrub pruning, bracing, spraying, and surgery; indoor plant
4.6care; tree, bush, shrub, and stump removal, except when performed as part of a land clearing
4.7contract as defined in section 297A.68, subdivision 40; and tree trimming for public utility
4.8lines. Services performed under a construction contract for the installation of shrubbery,
4.9plants, sod, trees, bushes, and similar items are not taxable;
4.10 (vii) massages, except when provided by a licensed health care facility or professional
4.11or upon written referral from a licensed health care facility or professional for treatment of
4.12illness, injury, or disease; and
4.13 (viii) the furnishing of lodging, board, and care services for animals in kennels and other
4.14similar arrangements, but excluding veterinary and horse boarding services.
4.15 (h) A sale and a purchase includes the furnishing for a consideration of tangible personal
4.16property or taxable services by the United States or any of its agencies or instrumentalities,
4.17or the state of Minnesota, its agencies, instrumentalities, or political subdivisions.
4.18 (i) A sale and a purchase includes the furnishing for a consideration of
4.19telecommunications services, ancillary services associated with telecommunication services,
4.20and pay television services. Telecommunication services include, but are not limited to, the
4.21following services, as defined in section 297A.669: air-to-ground radiotelephone service,
4.22mobile telecommunication service, postpaid calling service, prepaid calling service, prepaid
4.23wireless calling service, and private communication services. The services in this paragraph
4.24are taxed to the extent allowed under federal law.
4.25 (j) A sale and a purchase includes the furnishing for a consideration of installation if the
4.26installation charges would be subject to the sales tax if the installation were provided by
4.27the seller of the item being installed.
4.28 (k) A sale and a purchase includes the rental of a vehicle by a motor vehicle dealer to a
4.29customer when (1) the vehicle is rented by the customer for a consideration, or (2) the motor
4.30vehicle dealer is reimbursed pursuant to a service contract as defined in section 59B.02,
4.31subdivision 11.
4.32 (l) A sale and a purchase includes furnishing for a consideration of specified digital
4.33products or other digital products or granting the right for a consideration to use specified
4Section 1.
REVISOR EAP/HL 25-0484703/18/25 5.1digital products or other digital products on a temporary or permanent basis and regardless
5.2of whether the purchaser is required to make continued payments for such right. Wherever
5.3the term "tangible personal property" is used in this chapter, other than in subdivisions 10
5.4and 38, the provisions also apply to specified digital products, or other digital products,
5.5unless specifically provided otherwise or the context indicates otherwise.
5.6 (m) The sale of the privilege of admission under section 297A.61, subdivision 3,
5.7paragraph (g), clause (1), to a place of amusement, recreational area, or athletic event
5.8includes all charges included in the privilege of admission's sales price, without deduction
5.9for amenities that may be provided, unless the amenities are separately stated and the
5.10purchaser of the privilege of admission is entitled to add or decline the amenities, and the
5.11amenities are not otherwise taxable.
5.12 (n) A sale and purchase includes the transfer for consideration of a taxable cannabis
5.13product as defined in section 295.81, subdivision 1, paragraph (r).
5.14 EFFECTIVE DATE.This section is effective for sales and purchases made after June
5.1530, 2025.
5.16 Sec. 2. Minnesota Statutes 2024, section 297A.61, subdivision 38, is amended to read:
5.17 Subd. 38.Bundled transaction.(a) "Bundled transaction" means the retail sale of two
5.18or more products when the products are otherwise distinct and identifiable, and the products
5.19are sold for one nonitemized price. As used in this subdivision, "product" includes tangible
5.20personal property, services, intangibles, and digital goods, including specified digital products
5.21or other digital products, but does not include real property or services to real property. A
5.22bundled transaction does not include the sale of any products in which the sales price varies,
5.23or is negotiable, based on the selection by the purchaser of the products included in the
5.24transaction.
5.25 (b) For purposes of this subdivision, "distinct and identifiable" products does not include:
5.26 (1) packaging and other materials, such as containers, boxes, sacks, bags, and bottles,
5.27wrapping, labels, tags, and instruction guides, that accompany the retail sale of the products
5.28and are incidental or immaterial to the retail sale. Examples of packaging that are incidental
5.29or immaterial include grocery sacks, shoe boxes, dry cleaning garment bags, and express
5.30delivery envelopes and boxes;
5.31 (2) a promotional product provided free of charge with the required purchase of another
5.32product. A promotional product is provided free of charge if the sales price of another
5Sec. 2.
REVISOR EAP/HL 25-0484703/18/25 6.1product, which is required to be purchased in order to receive the promotional product, does
6.2not vary depending on the inclusion of the promotional product; and
6.3 (3) items included in the definition of sales price.
6.4 (c) For purposes of this subdivision, the term "one nonitemized price" does not include
6.5a price that is separately identified by product on binding sales or other supporting
6.6sales-related documentation made available to the customer in paper or electronic form
6.7including but not limited to an invoice, bill of sale, receipt, contract, service agreement,
6.8lease agreement, periodic notice of rates and services, rate card, or price list.
6.9 (d) A transaction that otherwise meets the definition of a bundled transaction is not a
6.10bundled transaction if it is:
6.11 (1) the retail sale of tangible personal property and a service and the tangible personal
6.12property is essential to the use of the service, and is provided exclusively in connection with
6.13the service, and the true object of the transaction is the service;
6.14 (2) the retail sale of services if one service is provided that is essential to the use or
6.15receipt of a second service and the first service is provided exclusively in connection with
6.16the second service and the true object of the transaction is the second service;
6.17 (3) a transaction that includes taxable products and nontaxable products and the purchase
6.18price or sales price of the taxable products is de minimis; or
6.19 (4) the retail sale of exempt tangible personal property and taxable tangible personal
6.20property if:
6.21 (i) the transaction includes food and food ingredients, dietary supplements, drugs, durable
6.22medical equipment, mobility enhancing equipment, over-the-counter drugs, prosthetic
6.23devices, or medical supplies; and
6.24 (ii) the seller's purchase price or sales price of the taxable tangible personal property is
6.2550 percent or less of the total purchase price or sales price of the bundled tangible personal
6.26property. Sellers must not use a combination of the purchase price and sales price of the
6.27tangible personal property when making the 50 percent determination for a transaction.
6.28 (e) For purposes of this subdivision, "purchase price" means the measure subject to use
6.29tax on purchases made by the seller, and "de minimis" means that the seller's purchase price
6.30or sales price of the taxable products is ten percent or less of the total purchase price or sales
6.31price of the bundled products. Sellers shall use either the purchase price or the sales price
6.32of the products to determine if the taxable products are de minimis. Sellers must not use a
6.33combination of the purchase price and sales price of the products to determine if the taxable
6Sec. 2.
REVISOR EAP/HL 25-0484703/18/25 7.1products are de minimis. Sellers shall use the full term of a service contract to determine if
7.2the taxable products are de minimis.
7.3 EFFECTIVE DATE.This section is effective for sales and purchases made after June
7.430, 2025.
7.5 Sec. 3. Minnesota Statutes 2024, section 297A.67, subdivision 2, is amended to read:
7.6 Subd. 2.Food and food ingredients.Except as otherwise provided in this subdivision,
7.7food and food ingredients are exempt. For purposes of this subdivision, "food" and "food
7.8ingredients" mean substances, whether in liquid, concentrated, solid, frozen, dried, or
7.9dehydrated form, that are sold for ingestion or chewing by humans and are consumed for
7.10their taste or nutritional value. Food and food ingredients exempt under this subdivision do
7.11not include candy, soft drinks, dietary supplements, and prepared foods. Food and food
7.12ingredients do not include alcoholic beverages, tobacco, taxable cannabis products, medical
7.13cannabis flower, and medical cannabinoid products. For purposes of this subdivision,
7.14"alcoholic beverages" means beverages that are suitable for human consumption and contain
7.15one-half of one percent or more of alcohol by volume. For purposes of this subdivision,
7.16"tobacco" means cigarettes, cigars, chewing or pipe tobacco, or any other item that contains
7.17tobacco. For purposes of this subdivision, "taxable cannabis product" has the meaning given
7.18in section 295.81, subdivision 1, paragraph (r), "medical cannabis flower" has the meaning
7.19given in section 342.01, subdivision 54, and "medical cannabinoid product" has the meaning
7.20given in section 342.01, subdivision 52. For purposes of this subdivision, "dietary
7.21supplements" means any product, other than tobacco, intended to supplement the diet that:
7.22has the meaning given in subdivision 41.
7.23 (1) contains one or more of the following dietary ingredients:
7.24 (i) a vitamin;
7.25 (ii) a mineral;
7.26 (iii) an herb or other botanical;
7.27 (iv) an amino acid;
7.28 (v) a dietary substance for use by humans to supplement the diet by increasing the total
7.29dietary intake; and
7.30 (vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient
7.31described in items (i) to (v);
7Sec. 3.
REVISOR EAP/HL 25-0484703/18/25 8.1 (2) is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form,
8.2or if not intended for ingestion in such form, is not represented as conventional food and is
8.3not represented for use as a sole item of a meal or of the diet; and
8.4 (3) is required to be labeled as a dietary supplement, identifiable by the supplement facts
8.5box found on the label and as required pursuant to Code of Federal Regulations, title 21,
8.6section 101.36.
8.7 EFFECTIVE DATE.This section is effective for sales and purchases made after June
8.830, 2025.
8.9 Sec. 4. Minnesota Statutes 2024, section 297A.67, is amended by adding a subdivision to
8.10read:
8.11 Subd. 41.Dietary supplements.(a) Dietary supplements are exempt.
8.12 (b) For the purposes of this subdivision, "dietary supplements" means any product, other
8.13than tobacco, intended to supplement the diet that:
8.14 (1) contains one or more of the following dietary ingredients:
8.15 (i) a vitamin;
8.16 (ii) a mineral;
8.17 (iii) an herb or other botanical;
8.18 (iv) an amino acid;
8.19 (v) a dietary substance for use by humans to supplement the diet by increasing the total
8.20dietary intake; and
8.21 (vi) a concentrate, metabolite, constituent, extract, or combination of any ingredient
8.22described in items (i) to (v);
8.23 (2) is intended for ingestion in tablet, capsule, powder, softgel, gelcap, or liquid form,
8.24or if not intended for ingestion in such a form, is not represented as conventional food and
8.25is not represented for use as a sole item of a meal or of the diet; and
8.26 (3) is required to be labeled as a dietary supplement, identifiable by the "Supplemental
8.27Facts" box found on the label and as required pursuant to Code of Federal Regulations, title
8.2821, section 101.36.
8.29 EFFECTIVE DATE.This section is effective for sales and purchases made after June
8.3030, 2025.
8Sec. 4.
REVISOR EAP/HL 25-0484703/18/25