Purpose

This bill aims to reduce the cost burden for certain vehicles by exempting wheelchair accessible vehicles from the state motor vehicle sales tax and the rental motor vehicle tax and fee. It also makes related changes to when exemptions apply and how small vehicle lessors may handle the associated fees.

Main Provisions

• Exemption additions to Subdivision 4 of Minnesota Statutes 297A.64:
  • A lease or rental of a wheelchair accessible vehicle (as defined under Minnesota Statutes 297B.01 subdivision 19) is exempt from the motor vehicle sales tax and the rental motor vehicle tax and fee.
  • The exemption also applies to leases or rentals of vehicles used to provide a licensed taxi service.
  • The exemption also applies to a hearse or limousine used in connection with burial or funeral service.
  • The exemption also applies to a van designed or adapted primarily for transporting property rather than passengers.
• Interrelated exemption reference:
  • The tax and fee do not apply if the lease or rental of a vehicle is itself exempt from the tax under section 297A.62 subdivision 1.
• Lessor fee relief option:
  • A lessor may elect not to charge the fee in subdivision 2 if, in the previous calendar year, the lessor had no more than 20 vehicles available for lease that would have been subject to tax under this section, or no more than $50,000 in gross receipts that would have been subject to tax under this section.
• Administrative change:
  • The bill adds a new subdivision, identified as 297B.03.1.6, (with related definitions tied to wheelchair accessible vehicles and the exemption framework).

How this changes existing law

• Expands the list of exemptions to include wheelchair accessible vehicles from both the sales tax and rental tax/fee when leased or rented.
• Maintains existing exemptions for other categories (taxi service vehicles, hearses, limousines, and certain property-only vans) and places them within the same exemption framework.
• Allows small lessors to avoid charging the fee under specific annual thresholds, potentially reducing administrative burden for small rental operations.
• Introduces a new subdivision in the related tax/fee framework (297B.03.1.6) to support these changes.

Definitions and cross-references (noting key terms)

• Wheelchair accessible vehicle: defined in 297B.01 subdivision 19.
• Motor vehicle sales tax and rental motor vehicle tax and fee: the taxes/fees being addressed for exemption.
• Lessor: the party leasing vehicles to lessees.
• Lease or rental: the activity covered by the exemptions.
• 297A.64 subdivision 4: the section being amended to add exemptions.
• 297A.62 subdivision 1: cross-reference for when an exemption from tax applies.
• 297B.01 subdivision 19: definition source for “wheelchair accessible vehicle.”
• 297B.03.1.6: the newly added subdivision referenced by the bill.
• Gross receipts: used in the threshold for the lessor fee election.
• Calendar year: the time frame used to measure the lessor thresholds.

Relevant Terms wheelchair accessible vehicle motor vehicle sales tax rental motor vehicle tax and fee exemption lessor lease or rental tax exemption 297A.64 subdivision 4 297A.62 subdivision 1 297B.01 subdivision 19 297B.03.1.6 gross receipts calendar year taxi service vehicle hearse limousine van (property transport)