WEB EXTRA: What is and isn’t Taxed in Governor Dayton’s Proposal

Updated: 02/15/2013 1:37 PM KSTP.com By: Jennie Olson

Governor Dayton is prepared to fight hard for his $38 billion budget plan that includes a lower sales tax rate but a wide expansion of services that will be subject to the sales tax. Dayton's proposed budget includes a 5.5 percent tax on common services like hair styling and auto-care. The tax would be calculated on the cost of labor. Here are some examples of what is and isn't taxed in his proposal:

Still Exempt (no sales tax) Examples
Agricultural items (some)
Capital equipment
Clothing items under $100
Daycare services
Funeral services
Medical services
Mining production materials
Nonprofit purchases
Personal care attendants
Public safety items
Prescription drugs
Renewable energy systems
Residential heating fuels
Textbooks, computers for school use
Veterans organizations memberships

Currently Taxed (rate at 5.5 percent) Examples
Auto parts/repair parts
Books, CDs, magazines
Candy bars
Cats and dogs
Cleaning service
Cleaning supplies
Lawn care service
Lawn and garden
Lumber, paint, tile
Outdoor recreation items
Personal care items
Pet grooming
School supplies
Sporting goods
Utility bills

Newly Taxed (at 5.5 percent rate) Examples
Accounting services
Admission events/memberships
Advertising services
Architectural and engineering services
Auto repair
Bank charges
Investment counseling
Clothing items over $100
Computer services
Consulting services
Design services
Digital products
Legal services
Over-the-counter drugs
Personal instruction
Personal services
Transport/travel services
Veterinary services

View a complete list at www.revenue.state.mn.us/tax_reform