Purpose

This bill would change Minnesota’s motor vehicle sales tax rules by expanding an existing “in lieu tax” to apply not only to older passenger cars but also to motorcycles. The goal is to impose a 10 percent tax on the purchase price of certain older vehicles described in the statute.

Main provisions

• Expands the in lieu tax to cover motorcycles in addition to older passenger automobiles.
• Sets the tax rate at 10 percent of the purchase price.
• Applies to vehicles described in Minnesota Statutes section 297B.025, subdivision 1.
• Reframes the applicable tax language to cover both “older passenger automobile” and “motorcycle” in the same provision (subdivision 2 of section 297B.02).

How the tax would work (key mechanics)

• Purchase of an eligible vehicle (older passenger automobile or motorcycle described in 297B.025, subdivision 1) would owe the in lieu tax.
• The tax amount would be 10 percent of the vehicle’s purchase price.
• The tax is in lieu of the tax that was previously imposed in subdivision 1 (i.e., it replaces that portion of the tax with the new 10 percent rate for these vehicles).

Significant changes to existing law

• The language in Minnesota Statutes 2024 section 297B.02, subdivision 2 is amended to say “In lieu tax for older passenger automobile or motorcycle.”
• The text specifies a 10 percent tax on the purchase price for qualifying vehicles, expanding the scope from older passenger cars alone to include motorcycles as well.

Affected entities

• Buyers purchasing certain older passenger automobiles or motorcycles described in 297B.025, subdivision 1.
• It changes the tax obligation for those vehicle purchases by adding motorcycles to the group eligible for the in lieu tax and setting the rate at 10 percent of the purchase price.

Status

• The bill was read for the first time and referred to the Committee on Taxes.

Terminology and concepts to note

• in lieu tax
• older passenger automobile
• motorcycle
• purchase price
• 297B.02
• 297B.025 subdivision 1

Relevant Terms - in lieu tax - older passenger automobile - motorcycle - purchase price - 10 percent - Minnesota Statutes 297B.02 - Minnesota Statutes 297B.025 subdivision 1 - Taxation of motor vehicles