SF3669

Purpose

• Change how Minnesota calculates the registration tax for passenger automobiles and hearses.
• Move from a simpler or flat approach to using the vehicle’s price (MSRP) and the vehicle’s age to determine the tax.
• Apply different rules based on when the vehicle was first registered in Minnesota (before November 16, 2020 vs on/after that date).
• Clarify what counts in the tax calculation (MSRP, destination charge in some cases, and exclusions for certain costs).

Main Provisions

• Applies to: passenger automobiles (as defined by the statute) and hearses.
• Tax base: calculated as a percentage of the manufacturers suggested retail price (MSRP) of the vehicle, plus the destination charge for some cases; the calculation must not include the cost of accessories or optional equipment separately added to the vehicle.
• Destination charge treatment: destination charge is included for vehicles first registered in Minnesota before November 16, 2020; for vehicles first registered on or after that date, the destination charge is not included.
• MSRP determination: MSRP is determined using the list price information published by the manufacturer or a nationally recognized industry source; if that is not available, the actual sales price can be used.
• Alternative sources: if the registrar cannot determine the MSRP by the usual methods, other sources or methods may be used.
• Yearly percentage schedule (how the tax amount changes over time): the tax amount is based on a percentage of the MSRP that changes by the vehicle’s life year, starting with a higher percentage in the early years and decreasing in later years. The bill outlines a step-down schedule from the first year through the tenth year, with a specified rate for the eleventh year and beyond.
• Cap to prevent overpayment: for vehicles previously registered in Minnesota, the total amount due under this provision must not exceed the smallest total amount previously paid or due on the vehicle.
• Vehicle life reference: the year-by-year percentages depend on the “first year of vehicle life” and subsequent years, affecting how much tax is due each year.

Changes to Existing Law

• Replaces or revises the method for calculating the registration tax on passenger automobiles and hearses.
• Transitions to a depreciation-style, year-by-year percentage approach based on MSRP rather than a single flat rate.
• Adds explicit rules for how MSRP is determined and what data sources may be used.
• Removes, for newer registrations, the inclusion of the destination charge (while keeping it for older registrations).
• Introduces a cap so that tax cannot be higher than the smallest amount paid or due previously for the vehicle.
• Clarifies that the cost of accessories or optional equipment is not separately taxed as part of the MSRP for the calculation.

Implementation Notes (Key Details)

• The calculation relies on the MSRP, not including accessory costs, with the registrar or dealers using manufacturer list price data or recognized sources; if not available, actual sales price can be used.
• The rule distinguishes between vehicles first registered before and after a specific date (Nov 16, 2020), affecting whether the destination charge is included.
• The approach uses a sliding scale by vehicle age, with the tax as a percentage of MSRP that declines over time, and a separate rule for year 11 and beyond.
• If the vehicle has prior Minnesota registrations, the bill requires the total tax to be capped at the smallest amount previously paid or due.

Relevant Terms - Passenger automobiles - hearses - registration tax - manufacturers suggested retail price (MSRP) - destination charge - list price information - United States Code title 15 section 1232 (price label reference) - actual sales price - price label - dealer / deputy registrar - first year of vehicle life - year-by-year percentage schedule - initial registration date (before/after November 16, 2020) - cap on total amount due - accessories / optional equipment - smallest total amount previously paid or due - Minnesota Statutes 2025 Supplement section 168.013 subdivision 1a