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HF 5148

Motor vehicle registration tax modified, registration tax rebate provided, and money appropriated.

2025-2026 Regular Session Introduced by Brion Curran and 6 co-sponsors

The bill changes the vehicle registration tax with a life-long devaluation cap and, for eligible low-income owners, offers a one-time rebate funded by 2027-appropriated dollars.

Introduction and first reading, referred to Transportation Finance and Policy
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Bill Summary · HF 5148

Overview

HF 5148 is a Minnesota transportation bill that proposes changes to motor vehicle registration taxation, establishes a one-time registration tax rebate program, and appropriates funds to implement the rebate. The effective date for the tax changes is for registration periods starting on or after January 1, 2027. The rebate program targets specific vehicle owners with lower net income and who were subject to the current registration tax calculation in a defined initial year of life for the vehicle.

Main purpose and intent

  • Modify how the registration tax on passenger automobiles and hearses is calculated.
  • Provide a one-time refund (rebate) to eligible vehicle owners who paid the registration tax under the modified scheme.
  • Create a onetime appropriation to fund the rebate and require reporting on expenditures.

Key provisions and changes

  1. Registration tax adjustments (Section 1)

    • The base registration tax for passenger automobiles and hearses remains $10, then adds a percentage of the vehicle’s MSRP (manufacturer’s suggested retail price) with adjustments:
      • For vehicles first registered in Minnesota before November 16, 2020: 1.54% of MSRP plus the destination charge (subject to later adjustments).
      • For vehicles first registered on or after November 16, 2020: 1.575% of MSRP (subject to the same adjustments).
    • Accessories and optional equipment costs are not separately taxed; destination charges are not included for most vehicles (except for those first registered before Nov 16, 2020).
    • The determination of MSRP uses standardized sources (manufacturer list prices, price labels, or actual sales price if necessary).
    • The tax calculation must be based on information available to dealers and registrars at the time of initial registration.
    • A new “Tax Devaluation Schedule” caps the tax amount over the vehicle’s life, with different devaluation rates depending on the year of life and MSRP category:
      • The schedule provides year-by-year percentages (100% down to 10% or graded steps) depending on whether MSRP is under $50k, between $50k-$75k, or over $75k.
      • By the 11th year and beyond, the per-year calculation is capped (the text references a continuing lower portion or a fixed amount in earlier text; the new schedule clarifies values).
    • The total amount due for a vehicle cannot exceed the smallest total amount previously paid or due on that vehicle (i.e., a cap to prevent double or excessive charges).
    • Effective date: applies to taxes and fees payable for a registration period starting on or after January 1, 2027.

  2. Registration Tax Rebate (Section 2)

    • Establishes a rebate program for “qualified registration instances.”
    • A qualified instance requires:
      • The vehicle owner’s prior-year net income falls below the threshold corresponding to the Minnesota income tax third tier (adjusted for inflation).
      • The vehicle was taxed under the new portion of section 168.013, subdivision 1a, paragraph (e), for its first year of life.
      • The tax in that first year was payable for a registration period between July 1, 2025 and June 30, 2026.
    • Rebates: The rebate payment is the lesser of $150 or 20% of the total amount paid under the registration tax (84 for the first year calculation under section 168.013).
    • By October 15, 2026, the rebates must be issued. Each rebate comes with a notice explaining the primary uses of registration tax revenue.
    • The program requires information sharing between the Revenue and Public Safety departments to determine qualified instances.
    • A one-time appropriation is provided in fiscal year 2027 to fund the rebate, drawn from the driver and vehicle services operating account in the special revenue fund.
    • Administrative reporting: By January 15, 2027, the recipient agencies must jointly report on the expenditures, number of rebates, average rebate amount, and administrative costs.

Who is affected

  • Vehicle owners paying the motor vehicle registration tax for passenger cars and hearses, particularly:
    • Those with vehicles first registered before and after November 16, 2020 (due to different tax bases).
    • Owners of vehicles with lower household net incomes who meet the income threshold for the rebate.
  • State agencies: Department of Public Safety, Department of Revenue, and the Department of Employment and Economic Development (DEED) collaborate on administration, eligibility, and rebate distribution.
  • Vehicle owners are given a potential rebate and must be informed about how registration tax revenue is used.

Procedural and timing notes

  • The tax changes become effective for registrations starting January 1, 2027.
  • The rebate program targets a specific registration period (July 1, 2025 – June 30, 2026) for eligibility.
  • The rebate is a one-time, on-year funding initiative with explicit reporting requirements to legislative committees.
  • Documentation and disclosures facilitate interagency data sharing to determine qualified instances.

Overall, HF 5148 aims to recalibrate the motor vehicle registration tax to include a devaluation schedule, limit total charges over a vehicle’s life, and provide targeted financial relief via a rebate program for eligible low-income vehicle owners.

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

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