Purpose

• This bill relates to transportation and aims to implement changes tied to motor vehicle impacts, including a motor vehicle weight surcharge and weight disclosure requirements, plus a reporting and funding component.
• It seeks to revise how the vehicle registration tax is calculated for passenger automobiles and hearses, and to codify related changes in Minnesota law (amending existing statutes and adding new law provisions).

Main Provisions

• Definitions
  • The bill defines two types of vehicles covered: passenger automobiles and hearses.
• Registration tax basis and calculation
  • The tax is calculated as a percentage of the manufacturer’s suggested retail price (MSRP) plus the destination charge, with certain adjustments.
  • For some vehicles, the destination charge is treated differently depending on whether the vehicle was first registered in Minnesota before or after November 16, 2020.
  • The tax calculation cannot include the cost of extras like accessories or optional equipment (and in most cases cannot include the destination charge, with exceptions for vehicles registered before November 16, 2020).
• How MSRP is determined
  • The registrar must determine the MSRP using the list price information published by the manufacturer or by recognized third-party sources if the dealer does not use the manufacturer’s retail price label (or if that label is unavailable, the registrar can use the actual sales price).
  • If MSRP cannot be determined from these sources, the registrar may use other available sources or methods.
• Calculation schedule over the vehicle’s life
  • The amount of tax is tied to a depreciation-like schedule based on the vehicle’s age, calculated as a percentage of MSRP:
  • Year 1: 100%
  • Year 2: 95%
  • Year 3: 90%
  • Year 4: 80%
  • Year 5: 70%
  • Year 6: 60%
  • Year 7: 50%
  • Year 8: 40%
  • Year 9: 25%
  • Year 10: 10%
  • Year 11 and later: 20% (as specified in the bill)
• Caps and adjustments
  • For vehicles that have been previously registered in Minnesota, the total amount due under this new framework and any related subdivision cannot exceed the smallest total amount previously paid or due on the vehicle.
  • The commissioner must adjust the amount downward as needed to meet this cap.
• Administrative references
  • The proposal includes coding for new law in Minnesota Statutes chapter 325F and amends Minnesota Statutes 2025 Supplement section 168.013 subdivision 1a.

How This Changes Existing Law

• Adds a new subdivision to the existing registration tax framework (168.013 subdivision 1a) to implement a tiered, depreciation-based tax on passenger automobiles and hearses.
• Replaces or modifies the way MSRP and destination charges are used in calculating the registration tax, including limits on what costs can be included in the tax base.
• Introduces an 11th-year and later rate and a cap on total tax payable over the vehicle’s life to prevent overpayment relative to what was previously paid or due.
• Establishes new data sources and methods for determining MSRP when computing the tax.

Implementation and Administration

• Administration
  • The registrar of motor vehicles is responsible for calculating the tax, using MSRP sources and the described schedule, and applying adjustments and caps.
  • The commissioner has authority to reduce amounts as needed to comply with the cap.
• Data and sources
  • MSRP is to be based on manufacturer list price or widely used price data from reputable sources; if unavailable, actual sales price can be used, or other available sources if needed.
• Scope and sequencing
  • The changes affect how the registration tax is calculated for passenger automobiles and hearses and are designed to be implemented within the Minnesota Statutes framework, including amendments to sections and new law coding.

Financial Implications (High-Level)

• The tax base shifts from potentially constant annual fees to a depreciation-style schedule tied to MSRP and vehicle age, which could alter annual tax amounts over time for individual vehicles.
• The cap on total tax due and the downward adjustment requirement may limit total charges for a vehicle compared with the current system.
• The change may also interact with the bill’s stated goals around funding transportation-related programs and reporting requirements.

Relevant Terms - motor vehicle weight surcharge - weight disclosures - registration tax - manufacturers suggested retail price (MSRP) - destination charge - list price information - price label / retail price label - United States Code title 15 section 1232 - passenger automobile - hearse - registrar - commissioner - Minnesota Statutes 2025 Supplement section 168.013 subdivision 1a - depreciation-style tax schedule (years 1–10 and 11+) - cap on total tax due - pricing sources (manufacturer list price, third-party sources) - initial registration vs. subsequent registrations - chapter 325F (new law coding) - reporting requirement - appropriation of funds for the report