HF5138

Purpose

To modify how surcharges are charged for all-electric vehicles and to repeal the separate surcharge for plug-in hybrid electric vehicles, with the new revenue directed to the highway funding system.

Main provisions

• Applies to all-electric vehicles as defined in state law and adds a specific surcharge on top of the existing vehicle registration tax.

• Surcharge calculation (for all-electric vehicles):

  • The surcharge is the greater of:
  • The minimum amount (see below), or
  • A percentage-based amount calculated from the vehicle’s price and age, specifically:
    • 0.5% of the manufacturer's suggested retail price (MSRP) multiplied by 2 times the percentage specified in another section for the vehicle’s year of life, or
    • 10% for a vehicle in its 11th year of life or later.
  • The minimum amount is:
  • $150 for a registration period beginning on or after January 1, 2026 and on or before June 30, 2027, or
  • $200 for a registration period beginning on or after July 1, 2027.

• Revenue use: All revenue collected from this electric vehicle surcharge must be deposited into the Highway User Tax Distribution Fund.

• Repeal: Repeals the existing surcharge for plug-in hybrid electric vehicles (subdivision 1n), removing the separate PHEV surcharge.

• Effective scope: The new surcharge framework applies to relevant registration periods starting in 2026 and beyond.

Significant changes to existing law

• Introduces an all-electric vehicle surcharge in addition to the existing registration tax, with a price- and age-based calculation and specific minimums starting in 2026.
• Repeals the separate surcharge previously imposed on plug-in hybrid electric vehicles, eliminating that one-off PHEV charge.
• Directs the collected funds to the Highway User Tax Distribution Fund, increasing highway funding through EV-related charges.

Relevant terms - all-electric vehicle (EV) - plug-in hybrid electric vehicle (PHEV) - surcharge - MSRP (manufacturer’s suggested retail price) - Minnesota Statutes 168.013, subdivision 1m - subdivision 1n (repealed) - Highway User Tax Distribution Fund - registration period - vehicle life / year of life - minimum surcharge - age-based/seniority factor (year of life) - revenue deposit / funding for highways