HF5148

Purpose

The bill changes how Minnesota calculates the motor vehicle registration tax for passenger cars and hearses. It moves to a depreciation-style (devaluation) structure that taxes vehicles based on their age and price, and it creates a registration tax rebate funded by appropriations.

Main Provisions

• Tax base and method:
  • The registration tax for passenger automobiles and hearses is determined by a base amount plus a percentage of the vehicle’s Manufacturer’s Suggested Retail Price (MSRP). There are different calculations depending on when the vehicle was first registered in Minnesota (before or on/after November 16, 2020).
  • The calculation uses MSRP (or an alternate price source if MSRP isn’t available) and does not double-count accessories or optional equipment. Destination charge is generally excluded, with an exception for vehicles first registered before November 16, 2020.
• Destination charge and accessories:
  • Destination charges are only included in the tax for vehicles previously registered in Minnesota before November 16, 2020; for newer registrations, the destination charge is not included.
  • The cost of accessories or optional equipment is not separately added to the MSRP for tax purposes.
• MSRP determination:
  • The registrar must determine the MSRP using the list price from the manufacturer or recognized industry data sources. If those aren’t available, the registrar may use the actual sales price or other acceptable sources.
• Tax devaluation (depreciation) schedule:
  • The bill creates a depreciation schedule where the tax amount changes each year of the vehicle’s life. The percentage of the price used for the tax decreases over time.
  • There are separate depreciation tables based on MSRP categories:
  • Under $50,000
  • $50,000 to $75,000
  • Over $75,000
  • The tables specify the percentage of MSRP applied in each year (e.g., first year, second year, etc.), continuing through the tenth year and into 11th or later years.
• Cap on total tax due:
  • For vehicles previously registered in Minnesota, the total tax due under this subdivision cannot exceed the smallest total amount previously paid or due on the vehicle, regardless of ownership.
• Rebate and funding:
  • The bill provides for a registration tax rebate and appropriates money to fund the rebate program.
• Scope and implementation:
  • Applies to passenger automobiles and hearses as defined in existing statute, with administration by the registrar at the time of initial registration.
  • Reflects amendments to Minnesota Statutes 2025 Supplement section 168.013, subdivision 1a.

Significant Changes to Existing Law

• Replaces or reshapes the current registration tax calculation with a base amount plus a percentage of MSRP, plus a year-by-year depreciation schedule.
• Introduces a tiered depreciation framework based on MSRP thresholds and vehicle age, instead of a single flat calculation.
• Alters how destination charges are treated in the tax calculation (generally excluding them for newer registrations, with an exception for older registrations).
• Requires MSRP to be determined from manufacturer data or recognized sources (with fallback to actual sale price or other sources if needed).
• Adds a cap to prevent overpaying on older or previously registered vehicles.
• Establishes a rebate program funded by an appropriation, introducing a new financial mechanism tied to the tax change.

Relevant terms - registration tax - passenger automobile - hearse - Minnesota Statutes 168.013 - Manufacturers Suggested Retail Price (MSRP) - destination charge - initial registration date (before/after November 16, 2020) - tax devaluation schedule / depreciation schedule - year of vehicle life - MSRP categories (<$50,000; $50,000–$75,000; >$75,000) - base amount - actual sales price - retail price label (U.S. Code Title 15 Section 1232) - registrar - initial application for registration - smallest total amount previously paid or due - registration tax rebate - appropriation

Relevant Terms - registration tax - MSRP - MSRP categories - depreciation schedule - destination charge - passenger automobile - hearse - initial registration date - first registered prior to November 16, 2020 - rebate - appropriation - registrar - actual sales price - retail price label - U.S.C. Title 15 Section 1232