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HF 5102

Motor vehicle registration tax modified.

2025-2026 Regular Session Introduced by Pam Altendorf and 5 co-sponsors

Minnesota would tax vehicle registrations as a declining percentage of MSRP over 11 years, ending in a $20/year flat after year 11, effective Jan 1, 2027.

Author added Perryman
#motorvehicles #taxation
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WeVote Research Nonpartisan
Bill Summary · HF 5102

Summary of HF 5102 (2025-2026) — Minnesota: Motor Vehicle Registration Tax Modified

Purpose and Intent

HF 5102 revises how the motor vehicle registration tax is calculated for passenger automobiles and hearses. The bill changes the base tax structure from a fixed or previously determined rate to a tiered percentage of the vehicle’s Manufacturer’s Suggested Retail Price (MSRP) over the life of the vehicle, with adjustments over time. The effective date indicates the change applies to registration periods starting on or after January 1, 2027.

Key Provisions

  • Baseline tax structure: For passenger automobiles and hearses, the registration tax starts at a base of $10 plus a percentage of the MSRP (and destination charge, where applicable), subject to specified adjustments.

    • For vehicles registered in Minnesota before November 16, 2020: the rate is 1.54% (the text shows a proposed adjustment to 1.25% in parentheses; the final effective rate would be as enacted).
    • For vehicles registered on or after November 16, 2020: the rate is 1.575% (the text shows a proposed adjustment to 1.285% in parentheses; the final rate would be as enacted).
    • The calculation is subject to adjustments described in paragraphs (e) and (f).

  • Exclusions in the tax base:

    • The tax calculation must not include the cost of accessories or optional equipment separately added to the vehicle.
    • The tax calculation must not include a destination charge, except for vehicles previously registered in Minnesota prior to November 16, 2020.

  • Determination of MSRP:

    • The registrar should determine MSRP using: (a) list price information published by the manufacturer or reputable auto industry data sources, (b) the retail price label provided by the manufacturer under federal law (if the dealer does not determine the amount), or (c) if the label is unavailable, the actual sales price.
    • If the registrant is unable to ascertain MSRP by these methods, the registrar may use any other available source or method.

  • Timing of tax calculation:

    • The registration tax is calculated based on information available to dealers and deputy registrars at the time of the initial registration application.

  • Year-by-year percentage schedule (based on MSRP):

    • Year 1: 100% of MSRP price (upon 100% of the price).
    • 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 thereafter: a flat $20 per year.

  • Cap on total tax for previously registered vehicles:

    • For any vehicle previously registered in Minnesota (regardless of ownership history), the total amount due under this subdivision must not exceed the smallest total amount previously paid or due on the vehicle.

  • 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 Is Affected

  • Owners and purchasers of passenger automobiles and hearses registering their vehicles in Minnesota on or after January 1, 2027.
  • Dealers, registrars, and county license offices responsible for determining MSRP and calculating the registration tax.
  • Vehicles previously registered in Minnesota may see adjustments capped by the historical amount paid or due.

Procedural and Timeline Details

  • The bill specifies that the new tax calculations and percentages will apply to registration periods beginning January 1, 2027, with a start date effective the day after enactment.
  • The registrar’s determination of MSRP must rely on specific data sources and methods outlined in the bill, with fallback options if standard data are unavailable.
  • The annual percentage schedule is intended to reflect depreciation of the vehicle’s value over time, transitioning to a flat $20 annual amount after year 11.

Additional Notes

  • The bill includes several technical clarifications about what values are included or excluded in calculating the tax (e.g., accessories, destination charges as applicable).
  • The long-term structure aims to base registration tax on current vehicle value (MSRP) with a declining scale, rather than a flat or previously used fixed rate.

If you’d like, I can provide a side-by-side comparison with current Minnesota law to highlight the exact changes in percentages, dollar amounts, and timing.

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

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