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Bill Summary · SF 131

Summary of SF 131 (2025-2026 Minnesota Session) – Disabled Veterans Vehicle Registration Tax Amendment

Purpose and Intent

SF 131 proposes to modify the vehicle registration tax for certain disabled veterans. The core goal is to provide a tax reduction to disabled veterans based on their disability rating, reflecting the level of impairment as determined by the U.S. Department of Veterans Affairs (VA). The bill also establishes a mechanism to ensure the state budget accounts for these tax reductions in the highway funding framework.

Key Provisions

1) Tax Reduction for Disabled Veterans (New Subdivision)

  • Creates a new subdivision (Subd. 1n) titled “Disabled veterans.”
  • Eligibility: A vehicle owned by a disabled veteran.
  • Reduction mechanism:
    • The registration tax owed under subdivision 1a must be reduced.
    • The reduction equals a percentage of the tax that corresponds to the veteran’s VA disability rating percentage.
    • Only one vehicle per eligible owner qualifies for this reduction at a time.
  • Source of rating: The U.S. Department of Veterans Affairs disability rating.

2) Allocation and Transfer of Tax Reductions (Amended Subd. 8)

  • Reiterates general rules for tax proceeds (highway user fund) and fees (driver and vehicle services operating account), with an added provision:
  • By July 15 of each fiscal year, the Commissioner of Management and Budget must transfer from the general fund to the Highway User Tax Distribution Fund an amount equal to the total of the tax reductions made under Subd. 1n in the preceding fiscal year.
  • Purpose: This creates an annual reconciliation/financing mechanism so the general fund backfills the loss of tax revenue due to the reductions.

Who Is Affected

  • Primary beneficiaries: Disabled veterans who own a vehicle and meet the VA disability rating criteria.
  • Accessibility: Only one vehicle per eligible veteran owner may receive the reduction, preventing multi-vehicle stacking.
  • State fiscal impact: The reduction decreases tax revenue collected from vehicle registrations, necessitating an annual transfer from the general fund to the highway user tax distribution fund to offset the reduced tax proceeds (per the new Subd. 8(c)).

Procedural and Timeline Aspects

  • Introduction and referral: Introduced and referred to Transportation in January 2025.
  • Major action history: An authorization/authorization-level change occurred (authorship changes) in March 2025.
  • Fiscal note/offset mechanism: The annual transfer from the general fund to the highway user tax distribution fund must occur by July 15 of each fiscal year, covering the prior year’s total reductions.
  • Administration: Administration of the tax reduction is tied to VA disability ratings; the Minnesota Department of Public Safety’s vehicle registration process would apply the reduction at the point of tax calculation.

Practical Implications

  • Financial relief for disabled veterans with eligible vehicles, scaled to disability severity.
  • Administrative implementation hinges on VA rating data and verification for ownership.
  • State budget planning must accommodate annual backfill to the highway fund, ensuring revenue neutrality for the tax system despite reductions.

Summary

SF 131 amends Minnesota’s vehicle registration tax by providing a VA-disability-based reduction for disabled veterans—one vehicle per eligible owner, with the reduction corresponding to the veteran’s VA disability rating. To address revenue impact, the bill requires an annual transfer from the general fund to the highway user tax distribution fund equal to the prior year’s total reductions. The bill was introduced in 2025 and referred to Transportation, with a co-sponsor listed as Rob Farnsworth.

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

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