HF4775

Purpose

This bill changes how Minnesota defines “prepared food” for sales and use tax. By updating the definition, it decides which foods are taxed as prepared food and thus subject to the relevant sales tax rules.

Main provisions

• Amends Minnesota Statutes 2024, section 297A.61, subdivision 31 to redefine “Prepared food.”
• A food item qualifies as prepared food if it meets any of the following conditions:
  • The food is sold with eating utensils provided by the seller (for example, plates, knives, forks, spoons, glasses, cups, napkins, or straws).
  • The food is sold in a heated state or heated by the seller.
  • Two or more food ingredients are mixed or combined by the seller for sale as a single item, with bakery items listed separately as an exception.
  • Bakery items include, but are not limited to, bread rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish pastries, cakes, tortes, pies, tarts, muffins, bars, cookies, and tortillas.
  • Ready-to-eat meat and seafood in an unheated state sold by weight.
  • Eggs, fish, meat, poultry, and foods containing these raw animal foods that require cooking by the consumer as recommended by the FDA in its Food Code (21 CFR Part 401.11) to prevent foodborne illness.
  • Food that is only sliced, repackaged, or pasteurized by the seller.
  • Food sold by a seller whose primary NAICS classification is in manufacturing sector 311, except subsector 3118.

Significant changes to existing law

• Expands or clarifies what counts as “prepared food” for sales tax purposes by adding or tightening categories such as:
  • foods sold with utensils
  • heated foods
  • mixed-ingredient items (with bakery items carved out as a specific exception)
  • certain raw-ingredient foods that require consumer cooking per FDA guidance
  • foods that are sliced, repackaged, or pasteurized by the seller
  • sales by manufacturers in sector 311 (with certain exceptions)
• Aligns the definition with food-safety considerations (FDA Food Code) and with how certain foods are produced or packaged.

Implications

• Items that meet these criteria may be treated as prepared foods for tax purposes, affecting how they are taxed.
• Bakery items are expressly treated under an exception in the mixed-ingredients category, which could affect how some bakery products are taxed when they are mixed or combined by the seller.
• The provision referencing manufacturing-sector sellers (NAICS 311) expands or clarifies the tax treatment for foods sold by certain manufacturers.

How this interacts with the law

• It is a modification to the definition used to determine sales tax applicability for foods, not a standalone tax rate change. The exact tax treatment depends on whether a food item now fits the broadened definition of “prepared food.”

Terminology to know

• Prepared food
• Sales and use tax
• Minnesota Statutes 2024 section 297A.61, subdivision 31
• Heated state
• Eating utensils provided by the seller
• Bakery items (bread rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas)
• Ready-to-eat meat and seafood
• Unheated state sold by weight
• Eggs, fish, meat, poultry and foods containing these raw animal foods
• FDA Food Code, 21 CFR Part 401.11
• Sliced, repackaged, or pasteurized by the seller
• NAICS sector 311 (manufacturing), with exception for subsector 3118

Relevant Terms prepared food sales tax Minnesota Statutes 2024 section 297A.61 subdivision 31 heated state eating utensils bakery items (bread rolls, buns, biscuits, bagels, croissants, pastries, donuts, Danish, cakes, tortes, pies, tarts, muffins, bars, cookies, tortillas) ready-to-eat meat and seafood unheated state FDA Food Code 21 CFR 401.11 sliced repackaged pasteurized NAICS sector 311 manufacturing subsector 3118