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HF 5138

All-electric vehicle and plug-in hybrid electric vehicle surcharge modified.

2025-2026 Regular Session Introduced by Larry Kraft and 1 co-sponsor

Implements a flat $75 EV surcharge starting 2027, repeals the PHEV framework, and directs all EV surcharge revenue to the Highway User Tax Distribution Fund.

Author added Kraft
#energy #motorvehicles #transportationandtransportationdepartment
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WeVote Research Nonpartisan
Bill Summary · HF 5138

HF5138 (2025-2026) — All-electric vehicle and plug-in hybrid electric vehicle surcharge modified

What the bill aims to do

  • Reforms or replaces the existing surcharges on electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) in Minnesota.
  • Establishes a new, uniform surcharge structure for all-electric vehicles and repeals the current PHEV surcharge framework.
  • Reallocates revenue from these surcharges to the Highway User Tax Distribution Fund.
  • Sets effective dates that apply to registration periods starting in 2027, with the enactment taking effect the day after final enactment.

Key provisions

  • All-electric vehicles (EVs) surcharge (new framework):

    • Imposes a flat surcharge of $75 on all-electric vehicles (as defined in Minnesota Statutes 169.011, subd. 1a) in addition to the existing vehicle tax.
    • The surcharge is in addition to the standard vehicle tax under subdivision 1a.
    • The surcharge applies to registration periods for taxes payable starting on or after January 1, 2027.
    • Revenue from this surcharge deposits into the Highway User Tax Distribution Fund (HUTDF).

  • ** repealing the current EV/PHEV surcharge framework:**

    • Repeals existing language governing the current EV surcharge (subdivision 1m) and the prior PHEV surcharge (subdivision 1n) from Minnesota Statutes 2025 Supplement.
    • Removes the previous structure based on a percentage of the MSRP or year-of-life-based percentages, and the tiered minimums that existed prior to the 2027 date.
    • The repeal is effective the day after final enactment and applies to taxes payable for registration periods starting on or after January 1, 2027.

  • Plug-in hybrid electric vehicle (PHEV) surcharge (repealed):

    • The current PHEV surcharge structure (which used a combination of a minimum amount and a percentage of MSRP adjusted by vehicle age) is repealed.
    • The PHEV surcharge language is removed in its entirety; there is no new PHEV surcharge defined in HF5138.

  • Revenue allocation:

    • All revenue collected under the EV surcharge is directed to the Highway User Tax Distribution Fund (HUTDF), continuing the general purpose allocation to highway and transportation funding.

Who/what is affected

  • Owners and registrants of all-electric vehicles (EVs): subject to a new fixed surcharge of $75 per registration period starting January 1, 2027.
  • Owners and registrants of plug-in hybrid electric vehicles (PHEVs): under HF5138, the existing PHEV surcharge framework is repealed; the bill does not establish a new PHEV surcharge, effectively ending the prior structure unless further amendments are enacted.
  • State transportation funding: more predictable revenue stream dedicated to the Highway User Tax Distribution Fund from the EV surcharge, potentially influencing highway and transportation project funding.

Timeline and procedural notes

  • Effective date: The EV surcharge is in effect for taxes payable for registration periods starting on or after January 1, 2027; the bill’s enactment becomes effective the day after final enactment.
  • Repeal timing: Repeal of the existing PHEV surcharge (subdivision 1n) and associated language takes effect the day after final enactment, applying to registration periods starting January 1, 2027.
  • Introduced and referred: The bill was introduced and referred to the Transportation Finance and Policy committee on May 12, 2026.

Summary of impact

  • Simplifies and standardizes the EV surcharge to a flat $75 per EV registration period, starting 2027.
  • Removes the prior, more complex surcharge formulas for EVs and the PHEV surcharge structure.
  • Shifts all related revenue to the Highway User Tax Distribution Fund, aligning EV-related revenue with highway funding.
  • Likely impacts vehicle owners differently depending on current MSRP-based calculations versus the new flat-rate approach, with the first pay period under the new system beginning in 2027.

Compiled from official sources — confirm details with the bill’s official record.

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