Car Sales Tax in Minnesota: Rate, Exemptions, and Fees

The car sales tax in Minnesota is 6.875% of the purchase price, applied after any trade-in allowance and manufacturer rebate are subtracted.¹ The same rate applies whether you buy from a dealer or a private seller, and it is due when you transfer the title. Expect a separate annual registration tax, title fees, and plate costs on top of it, so the total you hand over at the registrar is noticeably more than the sales tax alone.

What the 6.875% Rate Covers

Minnesota’s motor vehicle sales tax is a standalone excise tax under Chapter 297B, not part of the general state sales tax.² Because it sits in its own chapter, the local percentage sales taxes that counties and cities add to other purchases do not stack on top of it.³ The percentage is 6.875% statewide.

Some counties do impose a separate flat $20 excise tax on each motor vehicle purchased in the county, and that will show up as its own line on your receipt.⁴

One narrow category pays something different. Vehicles registered as Collector, Classic, Street Rod, or Pioneer pay a flat $150 in-lieu tax rather than 6.875% of the price.

How the Taxable Price Is Figured

The tax applies to the “purchase price,” defined by statute as the total consideration paid, valued in money.⁵ Two adjustments bring that number down before the rate is applied:

Trade-in credit. The value a dealer allows for your trade-in is subtracted from the selling price, and you pay tax only on the difference.⁵
Manufacturer rebates. Minnesota excludes manufacturer rebates from the purchase price, so a rebate reduces what you owe tax on.⁵

A worked example: a $30,000 vehicle with a $5,000 trade-in and a $2,000 manufacturer rebate has a taxable purchase price of $23,000. At 6.875%, the tax is $1,581.25.

You cannot shrink the tax by writing a low number on the bill of sale. For gifts and transfers with little or no money changing hands, the registrar uses published guides to determine the average value of similar vehicles, and that assessed value becomes the taxable amount.⁵ The real way to transfer a vehicle tax-free is through one of the exclusions below.

When You Owe No Sales Tax

Several transfers carry no motor vehicle sales tax. Most are built into the definition of “purchase price” rather than listed as traditional exemptions, but the result is the same: $0 owed.

Gifts Between Close Family

Gifting a vehicle between spouses or between a parent and child is excluded from the purchase price.⁵ The same exclusion applies between a foster parent and foster child when the foster home was licensed and the county verifies the relationship, and a guardian can transfer a vehicle to a ward tax-free when the title was held in the guardian’s name only because the ward was a minor.

Both parties fill out a Motor Vehicle Gift Affidavit, Form PS2080, naming buyer and seller, listing vehicle identification details, and swearing that no money changed hands. Both signatures are required, and the form must be notarized or signed in front of a deputy registrar.

Gifts from anyone outside those specific relationships do not qualify. A car from a friend or a sibling is treated like a sale, with the registrar assessing fair market value and charging 6.875% on it.

Divorce Transfers

A vehicle transferred between spouses as part of a divorce, whether voluntary or ordered by the court, is not treated as a taxable sale.⁵

Disability Modifications

The cost of modifications made to accommodate a disability is excluded from the purchase price.⁵ If a wheelchair-accessible van costs $45,000 and the accessibility work accounts for $12,000, the tax is calculated on the remaining $33,000.

Certain Nonprofit Purchases

Nonprofits organized exclusively for charitable, religious, or educational purposes can buy some vehicles tax-free, but the carve-out is narrow. The vehicle must be a truck, bus, or passenger automobile designed to carry more than nine people, and it must primarily transport property or the individuals the organization serves rather than its employees.⁶ A church van used for food bank deliveries qualifies; a sedan for the pastor likely does not.

Buying Out of State

Bringing in a car you bought elsewhere does not get you out of the 6.875%. The PS2000 title application has a line for sales tax already paid to another state, and Minnesota credits that amount against what you owe.⁷ Paid 5% in the other state? You owe the remaining 1.875% here. Paid more than 6.875%? Minnesota does not refund the difference.

Some states offer a drive-away exemption so nonresidents don’t pay tax at purchase. Whether you can use it depends on the selling state’s rules, but either way the full 6.875%, minus any credit, is due in Minnesota when you title the vehicle.

What to Bring and When

You have 10 days from the date of sale to submit your title application and pay the tax.⁷ Walking in without the right paperwork means walking back out without registration, so gather it ahead of time:

The properly assigned title, with the seller’s signature and the odometer reading filled in. Federal law requires odometer disclosure for the first 20 years of a vehicle’s life for model year 2011 and newer; model year 2010 and older vehicles are exempt.⁸
A bill of sale showing the purchase price, date of sale, and both parties’ information. In a private sale, this is your primary proof of what you paid.
Form PS2000, the Application to Title and Register a Motor Vehicle, which captures the vehicle details, your tax calculation, insurance information, and any lien. Download it from the DVS website or pick one up at a deputy registrar office.⁷
Form PS2080, the Motor Vehicle Gift Affidavit, only if you are claiming a tax-exempt gift transfer.
Proof of insurance: company, policy number, and expiration date.

Where and How to Pay

Dealers normally collect the sales tax and file the title paperwork for you. In a private sale, you take everything to a deputy registrar office or a DVS location yourself.²

Most offices accept checks and cards. Credit and debit transactions usually carry a convenience fee around 2% to 2.5% of the total, so on a $2,000 tax bill a check saves you $40 to $50. Miss the 10-day deadline and a late transfer penalty applies.⁹

Once your payment clears and the application is accepted, the registrar issues temporary registration so you can drive legally. The official Minnesota title arrives by mail, typically in four to six weeks.

Other Fees at Registration

The sales tax is the largest one-time cost, not the only one. A few charges land on the same transaction and often push the total higher than people expect.

Annual Registration Tax

Minnesota charges a separate registration tax every year based on the vehicle’s original MSRP and its age. For passenger automobiles first registered on or after November 16, 2020, the rate is $10 plus 1.575% of the MSRP, with the MSRP depreciated on a sliding scale: 100% in the first year, then 95%, 90%, 80%, 70%, 60%, 50%, 40%, and 25% through year nine, and $20 flat from the eleventh year on.¹⁰

So a new car with a $35,000 MSRP owes roughly $561 in registration tax the first year ($10 plus 1.575% of $35,000). By year six that figure drops to about $341. The tax is due at initial registration and at every renewal.

Electric Vehicle Surcharge

Starting in January 2026, fully electric vehicles owe an additional annual surcharge of 0.5% of MSRP, following the same age-based depreciation as the registration tax. Plug-in hybrids owe 0.25%. The minimum surcharge is $150 regardless of age or MSRP.¹⁰ A new EV with a $50,000 MSRP would see a $250 surcharge on top of the regular registration tax in year one.

Title and Plate Fees

Administrative charges for the title transfer, filing, plate issuance, and a public safety vehicle fee are added at registration. Each is modest on its own, but together they are a noticeable line on top of the sales tax and registration tax. Current amounts are posted on the Department of Public Safety’s vehicle fees page.⁹ Bring more than just the sales tax amount when you go.

1
Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.02 – Tax Imposed
2
Minnesota Department of Revenue. Motor Vehicle Sales
3
Minnesota Office of the Revisor of Statutes. Minnesota Code 297B – Sales Tax on Motor Vehicles
4
Minnesota House of Representatives. County Transportation Taxes
5
Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.01 – Definitions
6
Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.03 – Exemptions
7
Minnesota Department of Public Safety. Application to Title and Register a Motor Vehicle
8
National Highway Traffic Safety Administration. Consumer Alert – Changes to Odometer Disclosure Requirements
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Minnesota Department of Public Safety. Vehicle Fees
10
Minnesota Office of the Revisor of Statutes. Minnesota Code 168.013 – Taxation of Motor Vehicles