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Bill Summary · SF 5219

Summary of SF 5219 (2025-2026) — Minnesota: Motor Vehicle Registration Tax Modification

Purpose and Objective

  • The bill modifies how the motor vehicle registration tax is calculated for passenger automobiles and hearses.
  • It aims to adjust the calculation method to tie the registration tax more closely to the vehicle’s value over time, using a prescribed percentage of the manufacturer's suggested retail price (MSRP) that declines over the vehicle’s life, with a fixed minimum after year 11.
  • The effective date is for registration periods starting on or after January 1, 2027.

Key Provisions

Base Tax and Vehicle Scope

  • Applies to passenger automobiles (as defined in Minnesota Statutes) and hearses.
  • Base registration tax: $10, plus a percentage of the MSRP (with the destination charge treated separately in certain cases).
  • The calculation excludes most optional equipment and accessories from the tax calculation. Destination charges are generally excluded unless the vehicle was previously registered in Minnesota before Nov 16, 2020.

MSRP-Based Tax Calculation (Subd. 1a, new wording)

  • New vehicles (initial registration in Minnesota before Nov 16, 2020):
    • Tax rate: 1.54% of the MSRP plus destination charge (subject to adjustments listed later).
  • New vehicles (initial registration on or after Nov 16, 2020):
    • Tax rate: 1.575% of the MSRP plus destination charge (subject to adjustments listed later).
  • The registrar determines the MSRP using:
    • Manufacturer list price or data from a nationally recognized firm/association.
    • If dealer-determined, the retail price label from the manufacturer (U.S. Code reference) can be used.
    • If no label is available, the actual sales price can be used.
    • If MSRP cannot be ascertained by these methods, other available sources/methods may be used.
  • Title and registration staff use information available to dealers and deputy registrars at the time of the initial application.

Depreciation/Reduction Schedule (Percent of MSRP)

  • The percentage of the MSRP used to calculate the tax declines over the vehicle’s first 10 years (and then a fixed amount thereafter):
    • Year 1: 100% of MSRP
    • Year 2: 95% of MSRP
    • Year 3: 90% of MSRP
    • Year 4: 80% of MSRP
    • Year 5: 70% of MSRP
    • Year 6: 60% of MSRP
    • Year 7: 50% of MSRP
    • Year 8: 40% of MSRP
    • Year 9: 25% of MSRP
    • Year 10: 10% of MSRP
    • Year 11 and each subsequent year: a fixed $20 (per year)
  • These percentages apply to the amounts under Section 1(a)(1) and (2) (the two MSRP-based calculation paths for pre- and post-2020 registrations).

Cap on Total Tax for Previously Registered Vehicles

  • For any vehicle previously registered in Minnesota (regardless of ownership changes), the total amount due under this subdivision must not exceed the smallest total amount previously paid or due on the vehicle.
  • This provides a cap to ensure no retroactive over-collection for vehicles with prior registration history.

Effective Date and Applicability

  • Effective the day after final enactment.
  • Applies to taxes and fees payable for a registration period starting on or after January 1, 2027.

Who/What Would Be Affected

  • Owners of passenger automobiles and hearses registering in Minnesota for the first time and renewing registrations thereafter.
  • Vehicle dealers and registrar staff responsible for determining MSRP and applying the tax.
  • Individuals purchasing older vehicles that may have different initial registration dates (pre- vs. post-2020) due to the tiered rate.

Procedural and Timeline Considerations

  • Transition: The new tax framework would apply to registrations starting in 2027, providing time for dealers and registrars to adjust systems and for vehicle owners to anticipate changes.
  • Determinations of MSRP: Registrars rely on manufacturer pricing data, retail labels, or actual sales price when necessary.
  • Caps: The cap on total liability for previously registered vehicles could influence planning for owners with long-standing Minnesota registrations.

Practical Implications

  • For vehicles with high MSRP, the early years (Year 1–Year 3) yield the highest tax amounts (100%–90% of MSRP), gradually decreasing over time.
  • After year 11, the tax becomes a flat $20 per year, potentially reducing annual costs for older vehicles.
  • The structure shifts the registration tax from a percent of MSRP that remains relatively stable to a depreciation-based scheme, with a fixed minimum thereafter.

If you’d like, I can provide hypothetical examples (e.g., a $40,000 MSRP vehicle under both pre-2020 and post-2020 rules) to illustrate annual tax amounts across the years.

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

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