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The Minnesota Fur Tax: How to Choose a Coat This Winter

  • Nov 27, 2015 | Stephanie Faris

Minnesotans know a thing or two about winter coats, and the government knows it can be pricey for state residents to keep warm. Whether they choose a ski jacket, a wool overcoat, or one of the many other stylish options on the market, Minnesota shoppers won’t pay tax. Coats and jackets are included in the many clothing items that are sales tax-exempt in Minnesota.

There is one notable exception to this law, however. Certain fur coats are taxable in the state. But the taxability depends heavily on how the item is made. If you're buying or selling a coat that used to be part of an animal in Minnesota, know the tax rules on fur. Hint: It has to do with how much those furry bits cost.

Animal Products

So what constitutes a “fur coat"? What if a regular coat has a fur collar? Does faux fur count? Since leather and suede jackets are made from animal skins, are they included in this tax regulation? Minnesota state law stipulates that the fur components in the coat must have a value that is three times greater than the next most expensive tangible component. So a fur retailer must determine the value of the fur components to determine the taxability.

Minnesota directs taxpayers to the Federal Fur Products Labeling Act, which dictates the requirements for a product to be labeled as fur. The relevant statute defines fur as “any animal skin or part thereof with hair, fleece, or fur fibers attached thereto, either in its raw or processed state.” Once the fur has been removed, the product no longer qualifies as a fur product, which includes cases where animal skin is converted into leather or suede.

Real vs. Faux Fur

For those who want the look of fur without the expense, a better option might be a fake fur coat, which is exempt from sales tax. Not only is faux fur less expensive on the rack, it will save customers the 6.875 percent state sales tax, plus any additional local taxes. But with real fur once again lining runways and designer racks, Minnesotans may be willing to pay extra for the real thing. However, fur-collared coats and faux fur will also be popular this year, so shoppers may be able to find a stylish coat without paying extra for sales tax.

Minnesota isn’t the only state that has chosen to remove fur clothing from its sales tax exemptions. Of the seven states that exempt sales tax on clothing, New Jersey and Pennsylvania join Minnesota in requiring residents to pay sales tax on clothing made of fur. In Minnesota, most other clothing items qualify for tax-free status, with the exception of sports shoes and protective athletic gear.

Finding the right outerwear can be difficult, especially in areas of the country with extremely low temperatures during the winter months. As warm as real fur coats can be, the extra sales tax and higher prices may drive Minnesotans to choose for equally attractive faux fur alternatives. They’ll be just as warm and won’t drain customers’ bank accounts.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this blog is for informational purposes only and does not provide legal or tax advice.
Avalara Author
Stephanie Faris
Avalara Author Stephanie Faris