Minnesota’s car sales tax is a flat 6.875 percent of the purchase price, charged whenever a vehicle is registered in the state. It applies to new and used cars, to dealer sales and private-party sales, and to vehicles bought out of state and brought home. What you actually pay at the counter depends on your trade-in, any manufacturer rebates, your county, and whether you qualify for one of a short list of exemptions.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.02 – Tax Imposed
The Rate and What Your County Adds
The statewide motor vehicle excise tax is 6.875 percent. That rate is set by state law and does not vary by city or dealer.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.02 – Tax Imposed
Some counties add more on top. Under Minnesota Statutes section 297A.993, counties may impose a transit sales tax of up to 0.5 percent and a flat $20 excise tax on each vehicle purchased in the county. As of early 2026, counties such as Faribault, Martin, and Sibley have an active 0.5 percent transit tax, and the list has been growing.2Minnesota House of Representatives. County Transportation Taxes Many counties also collect a wheelage tax of $10 to $20 at registration. All of these charges follow your home county, not the dealer’s, so your address is what determines the total.
What the Tax Is Calculated On
The taxable “purchase price” is the full amount you pay for the vehicle — cash, financing, and any property traded in — adjusted by two things that often get missed.
Trade-Ins Lower the Taxable Amount
When you trade a vehicle to a dealer, the credit the dealer gives you is subtracted from the sale price before tax. Buy a $30,000 car, trade in your old one for $8,000, and the 6.875 percent applies to $22,000. The deduction only works through a dealer. Selling your old car privately on the side does not reduce the tax on the new one.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.01 – Definitions
Manufacturer Rebates Are Excluded
Minnesota law excludes manufacturer rebates from the purchase price. A $35,000 sticker with a $3,000 rebate is taxed on $32,000. The rebate counts whether it is shown as a discount on the purchase agreement, applied as a down payment, or paid to you directly. Third-party rebates with a fixed value at the time of purchase get the same treatment.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.01 – Definitions4Minnesota Department of Revenue. Motor Vehicle Sales
Private Sales Use the Price You Paid, Within Reason
In a private sale, you report what you actually paid. If a vehicle is gifted or sold for a token amount outside the narrow family exemptions, the registrar is directed to use the average value of similar vehicles from standard pricing guides as the taxable amount. Underreporting a private-sale price to shrink the tax bill is something the state actively watches for.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.01 – Definitions
Who Doesn’t Pay the Tax
The exemptions are narrower than most people assume. Read each one closely before counting on it.
Gifts Within Specific Family Relationships
A vehicle given as a true gift between spouses, between a parent and child, or between a foster parent and foster child is excluded from the taxable purchase price. If any money changes hands, even a small amount, the registrar can treat the transfer as a sale and tax it at fair market value. The foster relationship must involve a home licensed under state rules, and the county has to verify it.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.01 – Definitions
Totally Disabled Veterans
Veterans with a total service-connected disability are fully exempt from the motor vehicle excise tax under section 297B.03. Nothing is prorated; qualifying veterans pay no percentage-based sales tax on the vehicle.5Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.03 – Exemptions
Certain Nonprofit Vehicles
Charitable, religious, or educational nonprofits can claim an exemption, but only for a truck, bus, or passenger car designed for more than nine occupants, and only when the vehicle is used primarily to transport goods or the people the organization serves. A nonprofit buying a regular sedan for staff use would not qualify.5Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.03 – Exemptions
Disability Modifications
The portion of a vehicle’s value that comes from accessibility modifications for a person with a disability is excluded from the purchase price. The base vehicle is still taxed; add-ons like wheelchair lifts and hand controls are not.3Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.01 – Definitions
Buying Out of State or Moving to Minnesota
Buying a car in another state does not let you skip the tax. Because the obligation is triggered by registering the vehicle in Minnesota, the 6.875 percent still applies. You get a credit for any sales or excise tax you already paid elsewhere. If the other state’s rate matched or beat Minnesota’s, you owe nothing more. If it was lower, you pay the difference.1Minnesota Office of the Revisor of Statutes. Minnesota Code 297B.02 – Tax Imposed Bring proof of the tax you paid, usually visible on the purchase agreement, to your deputy registrar.
If you are moving to Minnesota with a vehicle you already own, you have 60 days from becoming a resident to transfer the title and register. The same tax-and-credit rules apply. Missing the window can mean penalties, so handle it early.
Leased Vehicles Are Taxed Up Front
For any lease longer than 28 days, the full 6.875 percent is calculated on the total of all lease payments and paid in a single amount when you sign. The rate matches a purchase, but the base is the lease, not a sale price, and the upfront bill can be larger than people expect.6Minnesota House of Representatives. Motor Vehicle Lease and Rental Taxes
EV and Plug-In Hybrid Surcharges Are Separate
Starting January 1, 2026, Minnesota adds annual registration surcharges on electric and plug-in hybrid vehicles. These are not part of the sales tax; they show up every year at renewal.
- All-electric vehicles: 0.5 percent of the manufacturer’s suggested retail price, adjusted down with age (100 percent of MSRP in year one, scaling to 10 percent at year ten and beyond), with a $150 minimum through June 30, 2027, and $100 after that.7Minnesota Office of the Revisor of Statutes. Minnesota Code 168.013 – Taxes, Fees
- Plug-in hybrids: the same MSRP formula at 0.25 percent, with a $75 minimum through June 30, 2027, and $50 after that.7Minnesota Office of the Revisor of Statutes. Minnesota Code 168.013 – Taxes, Fees
A new all-electric vehicle with a $50,000 MSRP would owe $250 in the first year. By year five, with the MSRP factor at 80 percent, the surcharge drops to $200. Cheaper EVs land at the $150 floor.
How You Actually Pay It
Dealers handle the paperwork for most buyers. Minnesota Rule 7400.5200 requires the dealer to complete a title and registration application and submit it with the excise tax, registration fees, and all applicable charges to the registrar within ten days of the sale.8Legal Information Institute. Minnesota Rule 7400.5200 – Selling New or Used Motor Vehicle
In a private-party sale, you file it yourself. Bring the signed title, a completed Application for Title and Registration (Form PS2000), and payment to a deputy registrar office or the Driver and Vehicle Services central office. Most locations take checks, money orders, and credit cards; credit cards usually carry a convenience fee. You will also pay title transfer and plate fees on top of the sales tax. Keep the receipt the registrar issues. It is your proof the tax was paid if anything is questioned later.