SF5219

Purpose

• To change how the motor vehicle registration tax is calculated for passenger automobiles and hearses, shifting to a value based on the vehicle’s price (MSRP) and its age, rather than a flat or simpler formula.

Key terms and definitions

• Passenger automobile: as defined in Minnesota statute section 168.002 subdivision 24.
• Hearse: as defined in statute.
• Manufacturer’s Suggested Retail Price (MSRP): the price used as the basis for calculating the tax; determined from list price data published by the manufacturer or recognized automotive sources, or, if not available, the actual sales price.
• Destination charge: a separate charge often included in MSRP; under this bill, it is treated differently depending on when the vehicle was first registered.
• Registration tax: the amount paid when a vehicle is registered, calculated under this bill as a percentage of MSRP.
• Registrar/Department of Public Safety staff: the officials who calculate the tax and determine the MSRP when needed.
• Price label: the manufacturer's suggested retail price label; if unavailable, other sources may be used to determine MSRP.

Main provisions (what the bill does)

• Applies to: passenger automobiles and hearses.
• Base for tax: the registration tax is calculated as a percentage of the MSRP of the vehicle, subject to adjustments, rather than a flat or simple fixed amount.
• Determination of MSRP: if the dealer uses the MSRP label, the price label under US law (15 U.S.C. 1232) is used; if not available, the registrar uses the actual sales price; if MSRP cannot be determined from these methods, other sources may be used.
• Exclusion of extras: the tax calculation must not include the cost of accessories or optional equipment separately added to the vehicle.
• Destination charge: the destination charge is generally not included in the tax, except for vehicles first registered in Minnesota before November 16, 2020 (in which case the destination charge may be part of the calculation).
• Two registration-date tracks: There are different calculation rules depending on whether a vehicle was initially registered before or on/after November 16, 2020.
• Tiered percentage schedule by vehicle age: The tax amount is calculated as a percentage of the MSRP based on how many years the vehicle has been in use. The schedule provides two columns (one for each vehicle type) with percentages that decline each year from year 1 through year 10, and then a separate rule for year 11 and beyond.
• Cap on total tax: For any vehicle, the total amount due under this subdivision must not exceed the smallest total amount previously paid or due on that vehicle.
• Retroactive/ownership considerations: the cap applies regardless of prior ownership, and there are provisions to handle vehicles previously registered in Minnesota.

Calculation details (tiered schedule overview)

• Year 1: tax uses 100% of the MSRP (two-column format for the two vehicle types).
• Year 2: approximately 95% (one column) or 90% (the other column) of the MSRP.
• Year 3: approximately 90% (one column) or 80% (the other).
• Year 4: approximately 80% (one column) or 70% (the other).
• Year 5: approximately 70% (one column) or 60% (the other).
• Year 6: approximately 60% (one column) or 50% (the other).
• Year 7: approximately 50% (one column) or 40% (the other).
• Year 8: approximately 40% (one column) or 30% (the other).
• Year 9: approximately 25% (one column) or 20% (the other).
• Year 10: approximately 10% (one column) or 10% (the other; the text shows “ten percent” for year 10).
• Year 11 and onward: 20% for the applicable column(s). Note: The bill text lists two percentages per year (one column per vehicle type), reflecting differences between passenger automobiles and hearses.

Significant changes from current law

• Shifts the registration tax base from a prior structure to a percentage of MSRP that adjusts over the vehicle’s life.
• Introduces a two-category (passenger automobile vs. hearse) tiered schedule for tax percentages.
• Brings explicit rules for determining MSRP using manufacturer data, price labels, or actual sales price when necessary.
• Removes the inclusion of accessory costs in the tax base, and narrows the treatment of destination charges (with a specific exception for vehicles first registered before a set date).
• Adds a cap so the total tax on a vehicle cannot exceed the smallest amount previously paid or due, protecting against higher cumulative charges on the same vehicle.
• Sets procedures for how the registrar should compute and verify values, including fallback methods if MSRP data are unavailable.

Relevant notes - The changes are described in the context of Minnesota Statutes 2025 Supplement section 168.013, subdivision 1a, and reference the registrar’s authority and data sources (manufacturer MSRP, price labels, and actual sales price when needed).

Relevant Terms - registration tax - MSRP (Manufacturers Suggested Retail Price) - destination charge - price label (MSRP label) - United States Code title 15 section 1232 - list price information - passenger automobile - hearse - initial registration date (before/after November 16, 2020) - registrar - cap on total tax - accessory or optional equipment - Minnesota Statutes 168.013

If you’d like, I can tailor this to emphasize how it would affect a typical car owner, or list sample numbers for a hypothetical vehicle to illustrate the tax calculation.