HF4587

Purpose

• The bill changes which vehicle purchases and rentals are taxed in Minnesota. Specifically, it adds an exemption for wheelchair accessible vehicles from the motor vehicle sales tax and the rental motor vehicle tax and fee. It also makes a related change to how the exemptions are defined in state law.

Main Provisions

• Exemption added: Wheelchair accessible vehicles, as defined in Minnesota Statutes, are exempt from the motor vehicle sales tax and the rental motor vehicle tax and fee.
• Existing exemptions remain: The tax and fee do not apply to lease or rental of vehicles used for licensed taxi service, hearses or limousines used in funerals, or vans designed mainly to transport property rather than passengers.
• Relationship to other exemptions: The exemption for wheelchair accessible vehicles applies when the lease or rental would otherwise be exempt under a different tax law (section 297A.62, subdivision 1).
• Definitions and additions to statutes: The bill amends Minnesota Statutes 2024 section 297A.64 subdivision 4 and section 297B.01 by adding a new subdivision (297B.03.1.6) to support the wheelchair accessible vehicle exemption.

Details of the Tax Exemption

• What qualifies: A lease or rental of a wheelchair accessible vehicle is exempt from the tax and the fee.
• When the exemption applies: If the vehicle qualifies as wheelchair accessible, it falls under the exemption defined in section 297B.01 subdivision 19.
• Scope of exemption: Applies to both the sales tax on purchasing and the rental tax/fee on leasing, as described above.

Lessor (Owner) Opt-Out Provision

• Small lessor option: The lessor may choose not to charge the fee included in subdivision 2 if, in the previous calendar year, they had:
  • No more than 20 vehicles available for lease that would have been subject to tax, or
  • No more than $50,000 in gross receipts that would have been subject to tax.
• Purpose of opt-out: This is intended to reduce administrative burden for small rental businesses.

Significant Changes to Existing Law

• Adds a specific exemption for wheelchair accessible vehicles, expanding the list of vehicles that are not taxed when leased or rented.
• Introduces a new statutory subdivision (297B.03.1.6) and links the wheelchair accessible vehicle definition to this exemption.
• Keeps existing exemptions eligible and clarifies how exemptions interact with other tax exemptions.

Potential Impacts

• For individuals and organizations renting or leasing wheelchair accessible vehicles, costs may be lower due to the tax exemption.
• Small vehicle lessors may face less administrative burden if they qualify for the opt-out from charging the fee.
• Overall state tax revenue related to these transactions may decrease due to the added exemptions.

Relevant Terms wheelchair accessible vehicle; motor vehicle sales tax; rental motor vehicle tax; lease or rental; lessor; lessee; exemption; 297A.64 subdivision 4; 297B.01 subdivision 19; 297B.03.1.6; section 297A.62 subdivision 1; gross receipts; vehicle thresholds; tax exemption; licensed taxi service; hearse; limousine; funeral service; van designed for property transport.