HF4758

Purpose

• The bill changes how transportation-related taxes apply to electric vehicles (EVs) and the electricity used to power them. It adds a new per-vehicle surcharge for all-electric vehicles, creates taxes on electricity used as vehicle fuel, and establishes a tax credit. It also repeals a prior subsection and moves most EV-related revenue into the highway funding system.

Main Provisions

• Electric vehicle surcharge

  • A new surcharge is added for all-electric vehicles (as defined in the bill) on top of existing vehicle taxes.
  • How the surcharge is calculated:
  • It is the greater of:
    • a minimum amount, or
    • 0.5% of the vehicle’s Manufacturer’s Suggested Retail Price (MSRP) multiplied by a year-of-life factor specified in the bill (for 1 to 10 years), or 10% for a vehicle in its 11th or later year.
  • Minimum amounts by registration period:
  • $1,150 for a registration period beginning between January 1, 2026 and June 30, 2027.
  • $2,100 for a registration period beginning on or after July 1, 2027.
  • Exemptions:
  • The surcharge does not apply to a vehicle owner who regularly charges at a home residential charger (defined in the bill) and attests to nearly exclusive charging at home. This includes charging at a residential charger, a public charging station, or a combination, as long as charging is nearly exclusive at home.
  • Where the money goes:
  • Revenue from this surcharge is deposited into the Highway User Tax Distribution Fund.

• Electricity as vehicle fuel taxes

  • The bill proposes taxes related to electricity used as fuel to power vehicles (i.e., electricity as vehicle fuel). The specifics are defined in the bill’s amended statutory sections, but the general idea is to tax electricity used to power EVs.

• Tax credit

  • The bill establishes a tax credit related to transportation/EVs (details would be in the amended sections).

• Other amendments and repeals

  • The bill would amend several Minnesota statutes and repeals a specific subsection (296A.01 subdivision 19b) as part of these changes.
  • It also sets up coding for new law in Minnesota Statutes chapter 290 and makes related changes to several EV and fuel tax provisions.

Significant Changes to Existing Law

• Introduces a per-vehicle surcharge for all-electric vehicles that is in addition to current taxes.
• Establishes a separate tax framework for electricity used as vehicle fuel.
• Creates a tax credit connected to the transportation/EV context.
• Repeals a prior subsection and updates multiple statute sections to accommodate the new EV and electricity-fuel tax structure.
• Directs the EV surcharge revenue to the Highway User Tax Distribution Fund, tying EV-related funds more explicitly to highway funding.

Implementation Notes

• Time frames:
  • The first minimum surcharge amounts apply to registrations from January 1, 2026 through June 30, 2027.
  • Higher minimums apply for registrations beginning on or after July 1, 2027.
• Exemption details hinge on home charging behavior and self-reported charging patterns at a residential charger.

Summary of Intent

• The bill aims to:
  • Align EV fees with vehicle value and age to recover road-maintenance costs.
  • Encourage or reflect charging behavior and ownership patterns (home vs. public charging).
  • Shift EV-related revenue toward highway funding.
  • Create a framework for taxing electricity used as vehicle fuel and offer a tax credit to balance impacts.

Relevant Terms - electric vehicle (EV) - surcharge - MSRP (manufacturer's suggested retail price) - year of life (vehicle age in years) - minimum amount (set amounts for different registration periods) - registration period - residential charger - nearly exclusive charging - public charging station - electricity as vehicle fuel (electricity used to power vehicles) - Highway User Tax Distribution Fund - tax credit - Minnesota Statutes (various sections referenced) - repeal (of 296A.01 subdivision 19b)