Minnesota – Soda Clarified As Taxable

SALT Report 3448 – The Minnesota Department of Revenue has determined that soft drinks are a taxable item and the food product exemption does not apply.  For sales tax purposes soft drinks are defined as “nonalcoholic beverges that contain natural or artificial sweeteners”.

A drink is taxable if any of the following ingredients are listed in the product label: Agave, aspartame, barley malt, corn syrup, dextrose, evaporated cane juice, fructose, fruit juice concentrate, honey, invert sugar, maltitol, molasses, rice syrup, stevia, saccharin, sucralose, sucrose or any other artificial or natural sweeteners.

Examples include:

  • Bottled or canned water that contains sweeteners
  • Coffe 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)
  • Pedialyte
  • Sports drinks (Gatorade, Powerade, etc.)
  • Soda pop
  • Sparkling Catawba grape juice containing sweetners and 50 percent or less fruit juice

Examples of non taxable beverages include:

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

For Further Information:

MN Sales Tax Fact Sheet 102C

MN Statutes 297A.61, Subd. 32, Soft Drinks

MN Rule 8130.4700, Prepared Food, Candy, and Soft Drinks