1.1 A bill for an act
1.2 relating to transportation; amending and repealing certain transportation-related
1.3 taxes; amending Minnesota Statutes 2024, sections 168.013, subdivision 1a;
1.4 296A.07, subdivision 3; 296A.08, subdivision 2; 297A.99, subdivision 1; 297B.02,
1.5 subdivision 1; 297B.09, subdivision 1; 473.4051, subdivisions 2, 2a; repealing
1.6 Minnesota Statutes 2024, sections 297A.9915; 473.4465.
1.7BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.8 Section 1. Minnesota Statutes 2024, section 168.013, subdivision 1a, is amended to read:
1.9 Subd. 1a.Passenger automobile; hearse.(a) On passenger automobiles as defined in
1.10section 168.002, subdivision 24, and hearses, except as otherwise provided, the registration
1.11tax is calculated as $10 plus:
1.12 (1) for a vehicle initially registered in Minnesota prior to November 16, 2020, 1.54 1.25
1.13percent of the manufacturer's suggested retail price of the vehicle and the destination charge,
1.14subject to the adjustments in paragraphs (e) and (f); or
1.15 (2) for a vehicle initially registered in Minnesota on or after November 16, 2020, 1.575
1.161.285 percent of the manufacturer's suggested retail price of the vehicle, subject to the
1.17adjustments in paragraphs (e) and (f).
1.18 (b) The registration tax calculation must not include the cost of each accessory or item
1.19of optional equipment separately added to the vehicle and the manufacturer's suggested
1.20retail price. The registration tax calculation must not include a destination charge, except
1.21for a vehicle previously registered in Minnesota prior to November 16, 2020.
1.22 (c) The registrar must determine the manufacturer's suggested retail price:
1Section 1.
25-00592 as introduced11/20/24 REVISOR KRB/RC
SENATE
STATE OF MINNESOTA
S.F. No. 108NINETY-FOURTH SESSION
(SENATE AUTHORS: DRAZKOWSKI)
OFFICIAL STATUSD-PGDATE
Introduction and first reading01/16/2025
Referred to Transportation 2.1 (1) using list price information published by the manufacturer or any nationally
2.2recognized firm or association compiling such data for the automotive industry;
2.3 (2) if a dealer does not determine the amount, using the retail price label as provided by
2.4the manufacturer under United States Code, title 15, section 1232; or
2.5 (3) if the retail price label is not available, using the actual sales price of the vehicle.
2.6If the registrar is unable to ascertain the manufacturer's suggested retail price of any registered
2.7vehicle in the foregoing manner, the registrar may use any other available source or method.
2.8 (d) The registrar must calculate the registration tax using information available to dealers
2.9and deputy registrars at the time the initial application for registration is submitted.
2.10 (e) The amount under paragraph (a), clauses (1) and (2), must be calculated based on a
2.11percentage of the manufacturer's suggested retail price, as follows:
2.12 (1) during the first year of vehicle life, upon 100 percent of the price;
2.13 (2) for the second year, 95 90 percent of the price;
2.14 (3) for the third year, 90 80 percent of the price;
2.15 (4) for the fourth year, 80 70 percent of the price;
2.16 (5) for the fifth year, 70 60 percent of the price;
2.17 (6) for the sixth year, 60 50 percent of the price;
2.18 (7) for the seventh year, 50 40 percent of the price;
2.19 (8) for the eighth year, 40 30 percent of the price;
2.20 (9) for the ninth year, 25 20 percent of the price; and
2.21 (10) for the tenth year, ten percent of the price.
2.22 (f) For the 11th and each succeeding year, the amount under paragraph (a), clauses (1)
2.23and (2), must be calculated as $20 $25.
2.24 (g) Except as provided in subdivision 23, for any vehicle previously registered in
2.25Minnesota and regardless of prior ownership, the total amount due under this subdivision
2.26and subdivision 1m must not exceed the smallest total amount previously paid or due on
2.27the vehicle.
2.28 EFFECTIVE DATE.This section is effective the day following final enactment and
2.29applies to taxes payable for a registration period starting on or after January 1, 2026.
2Section 1.
25-00592 as introduced11/20/24 REVISOR KRB/RC 3.1 Sec. 2. Minnesota Statutes 2024, section 296A.07, subdivision 3, is amended to read:
3.2 Subd. 3.Rate of tax.(a) Subject to paragraph (b), The gasoline excise tax is imposed
3.3at the following rates:
3.4 (1) E85 is taxed at the rate of 17.75 cents per gallon;
3.5 (2) M85 is taxed at the rate of 14.25 cents per gallon; and
3.6 (3) all other gasoline is taxed at the rate of 25 cents per gallon.
3.7 (b) Annually on August 1, the commissioner must determine the tax rate applicable to
3.8the sale of E85, M85, and all other gasoline subject to tax under this section for the upcoming
3.912-month period beginning on January 1. The adjusted rate must equal the current rate,
3.10multiplied by one plus the percentage increase, if any, in the Minnesota Highway
3.11Construction Cost Index for the reference year. The tax rate must be rounded to the nearest
3.12tenth of a cent. Each of the tax rates for E85, M85, and all other gasoline must not be lower
3.13than the respective rates specified in paragraph (a). Beginning with the calculation on August
3.141, 2025, the percentage change in each of the tax rates for E85, M85, and all other gasoline
3.15as a result of the requirements under this paragraph must not exceed three percent.
3.16 (c) For purposes of this subdivision:
3.17 (1) the Minnesota Highway Construction Cost Index is as determined by the
3.18commissioner of transportation; and
3.19 (2) "reference year" means the 12-month period ending on June 30 two years prior to
3.20the year in which the calculation is made.
3.21 EFFECTIVE DATE.This section is effective July 1, 2025, and applies for taxes imposed
3.22on or after October 1, 2025.
3.23 Sec. 3. Minnesota Statutes 2024, section 296A.08, subdivision 2, is amended to read:
3.24 Subd. 2.Rate of tax.(a) Subject to paragraph (b), The special fuel excise tax is imposed
3.25at the following rates:
3.26 (1) liquefied petroleum gas or propane is taxed at the rate of 18.75 cents per gallon;
3.27 (2) liquefied natural gas is taxed at the rate of 15 cents per gallon;
3.28 (3) compressed natural gas is taxed at the rate of $1.974 per thousand cubic feet or 25
3.29cents per gasoline equivalent; and
3.30 (4) all other special fuel is taxed at the same rate as the gasoline excise tax as specified
3.31in section 296A.07, subdivision 2.
3Sec. 3.
25-00592 as introduced11/20/24 REVISOR KRB/RC 4.1 (b) Annually on August 1, the commissioner must determine the tax rate applicable to
4.2the sale of E85, M85, and all other gasoline subject to tax under this section for the upcoming
4.312-month period beginning on January 1. The rate must be adjusted as provided in section
4.4296A.07, subdivision 3, paragraph (b). The tax rate must be rounded to the nearest tenth of
4.5a cent. Each of the tax rates for liquefied natural gas or propane, liquefied natural gas,
4.6compressed natural gas, and all other special fuel must not be lower than the respective
4.7rates specified in paragraph (a).
4.8 (c) (b) The tax is payable in the form and manner prescribed by the commissioner.
4.9 (d) (c) For purposes of this subdivision, "gasoline equivalent," as defined by the National
4.10Conference on Weights and Measures, is 5.66 pounds of natural gas or 126.67 cubic feet.
4.11 EFFECTIVE DATE.This section is effective July 1, 2025, and applies for taxes imposed
4.12on or after October 1, 2025.
4.13 Sec. 4. Minnesota Statutes 2024, section 297A.99, subdivision 1, is amended to read:
4.14 Subdivision 1.Authorization; scope.(a) A political subdivision of this state may impose
4.15a general sales tax (1) under section 297A.9915, (2) under section 297A.992, (3) (2) under
4.16section 297A.9925, (4) (3) under section 297A.993, (5) (4) if permitted by special law, or
4.17(6) (5) if the political subdivision enacted and imposed the tax before January 1, 1982, and
4.18its predecessor provision.
4.19 (b) This section governs the imposition of a general sales tax by the political subdivision.
4.20The provisions of this section preempt the provisions of any special law:
4.21 (1) enacted before June 2, 1997, or
4.22 (2) enacted on or after June 2, 1997, that does not explicitly exempt the special law
4.23provision from this section's rules by reference.
4.24 (c) This section does not apply to or preempt a sales tax on motor vehicles. Beginning
4.25July 1, 2019, no political subdivision may impose a special excise tax on motor vehicles
4.26unless it is imposed under section 297A.993.
4.27 (d) A political subdivision may not advertise or expend funds for the promotion of a
4.28referendum to support imposing a local sales tax and may only spend funds related to
4.29imposing a local sales tax to:
4.30 (1) conduct the referendum;
4Sec. 4.
25-00592 as introduced11/20/24 REVISOR KRB/RC 5.1 (2) disseminate information included in the resolution adopted under subdivision 2, but
5.2only if the disseminated information includes a list of specific projects and the cost of each
5.3individual project;
5.4 (3) provide notice of, and conduct public forums at which proponents and opponents on
5.5the merits of the referendum are given equal time to express their opinions on the merits of
5.6the referendum;
5.7 (4) provide facts and data on the impact of the proposed local sales tax on consumer
5.8purchases; and
5.9 (5) provide facts and data related to the individual programs and projects to be funded
5.10with the local sales tax.
5.11 EFFECTIVE DATE.This section is effective October 1, 2025.
5.12 Sec. 5. Minnesota Statutes 2024, section 297B.02, subdivision 1, is amended to read:
5.13 Subdivision 1.Rate.(a) There is imposed an excise tax of 6.875 6.5 percent on the
5.14purchase price of any motor vehicle purchased or acquired, either in or outside of the state
5.15of Minnesota, which is required to be registered under the laws of this state.
5.16 (b) The excise tax is also imposed on the purchase price of motor vehicles purchased or
5.17acquired on Indian reservations when the tribal council has entered into a sales tax on motor
5.18vehicles refund agreement with the state of Minnesota.
5.19 EFFECTIVE DATE.This section is effective for sales and purchases made on or after
5.20July 1, 2025.
5.21 Sec. 6. Minnesota Statutes 2024, section 297B.09, subdivision 1, is amended to read:
5.22 Subdivision 1.Deposit of revenues.(a) Money collected and received under this chapter
5.23must be deposited as follows:
5.24 (1) 60 percent in the highway user tax distribution fund;
5.25 (2) 34.3 36 percent in the metropolitan area transit account under section 16A.88; and
5.26 (3) 5.7 four percent in the greater Minnesota transit account under section 16A.88.
5.27 (b) It is the intent of the legislature that the allocations under paragraph (a) remain
5.28unchanged for fiscal year 2024 2026 and all subsequent fiscal years.
5.29 EFFECTIVE DATE.This section is effective July 1, 2025.
5Sec. 6.
25-00592 as introduced11/20/24 REVISOR KRB/RC 6.1 Sec. 7. Minnesota Statutes 2024, section 473.4051, subdivision 2, is amended to read:
6.2 Subd. 2.Guideway and busway; operating costs.(a) After operating revenue, federal
6.3funds, and state funds are used for operations of a guideway or busway, as the terms are
6.4defined in section 473.4485, subdivision 1, the council must pay all remaining operating
6.5costs from sales tax revenue, as defined in section 473.4465, subdivision 1.
6.6 (b) The requirements under paragraph (a) do not apply to the costs of Northstar Commuter
6.7Rail attributed to operations outside of a metropolitan county.
6.8 EFFECTIVE DATE; APPLICATION.This section is effective October 1, 2025, and
6.9applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.
6.10 Sec. 8. Minnesota Statutes 2024, section 473.4051, subdivision 2a, is amended to read:
6.11 Subd. 2a.Guideway and busway; capital maintenance.(a) The council must pay all
6.12ongoing capital maintenance costs from one or more of: available federal funds; sales tax
6.13revenue, as defined in section 473.4465, subdivision 1 state funds; and proceeds from
6.14certificates of indebtedness, bonds, or other obligations under section 473.39.
6.15 (b) For purposes of this subdivision, "capital maintenance" includes routine maintenance,
6.16capital maintenance, and maintenance in a state of good repair.
6.17 EFFECTIVE DATE; APPLICATION.This section is effective October 1, 2025, and
6.18applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.
6.19 Sec. 9. GENERAL FUND TRANSFERS.
6.20 (a) By July 31, 2025, the commissioner of management and budget must consult with
6.21the commissioner of transportation to determine the revenue reduction resulting from this
6.22act to: (1) the highway user tax distribution fund; (2) the metropolitan area transit account
6.23under Minnesota Statutes, section 16A.88; and (3) the greater Minnesota transit account
6.24under Minnesota Statutes, section 16A.88. The determination must be made for each of
6.25fiscal years 2026, 2027, and 2028 based on the most recent revenue estimates.
6.26 (b) By July 31, 2025, the commissioner of management and budget must transfer the
6.27respective amounts as determined in paragraph (a) for fiscal year 2026 from the general
6.28fund to: (1) the highway user tax distribution fund; (2) the metropolitan area transit account
6.29under Minnesota Statutes, section 16A.88; and (3) the greater Minnesota transit account
6.30under Minnesota Statutes, section 16A.88.
6.31 EFFECTIVE DATE.This section is effective July 1, 2025.
6Sec. 9.
25-00592 as introduced11/20/24 REVISOR KRB/RC 7.1 Sec. 10. REPEALER.
7.2 Minnesota Statutes 2024, sections 297A.9915; and 473.4465, are repealed.
7.3 EFFECTIVE DATE; APPLICATION.This section is effective October 1, 2025, and
7.4applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.
7Sec. 10.
25-00592 as introduced11/20/24 REVISOR KRB/RC 297A.9915 REGIONAL TRANSPORTATION SALES AND USE TAX.
Subdivision 1.Definitions.(a) For purposes of this section, the following terms have the
meanings given.
(b) "Metropolitan area" means the counties of Anoka, Carver, Dakota, Hennepin, Ramsey,
Scott, and Washington.
(c) "Metropolitan Council" or "council" means the Metropolitan Council established by section
473.123.
(d) "Regional transportation sales tax" means the regional transportation sales and use tax
imposed under this section.
Subd. 2.Sales tax imposition; rate.Notwithstanding section 473.123, subdivision 1, the
Metropolitan Council must impose a regional transportation sales and use tax at a rate of
three-quarters of one percent on retail sales and uses taxable under this chapter made in the
metropolitan area or to a destination in the metropolitan area.
Subd. 3.Administration; collection; enforcement.Except as otherwise provided in this section,
the provisions of section 297A.99, subdivisions 4, and 6 to 12a, govern the administration, collection,
and enforcement of the regional transportation sales tax.
Subd. 4.Deposit.Proceeds of the regional transportation sales tax must be allocated as follows:
(1) 83 percent to the Metropolitan Council for the purposes specified under section 473.4465;
and
(2) 17 percent to metropolitan counties, as defined in section 174.49, subdivision 1, in the
manner provided under section 174.49, subdivision 5.
Subd. 5.Revenue bonds.(a) In addition to other authority granted in this section, and
notwithstanding section 473.39, subdivision 7, or any other law to the contrary, the council may,
by resolution, authorize the sale and issuance of revenue bonds, notes, or obligations to provide
funds to (1) implement the council's transit capital improvement program, and (2) refund bonds
issued under this subdivision.
(b) The bonds are payable from and secured by a pledge of all or part of the revenue received
under subdivision 4, clause (1), and associated investment earnings on debt proceeds. The council
may, by resolution, authorize the issuance of the bonds as general obligations of the council. The
bonds must be sold, issued, and secured in the manner provided in chapter 475, and the council has
the same powers and duties as a municipality and its governing body in issuing bonds under chapter
475, except that no election is required and the net debt limitations in chapter 475 do not apply to
such bonds. The proceeds of the bonds may also be used to fund necessary reserves and to pay
credit enhancement fees, issuance costs, and other financing costs during the life of the debt.
(c) The bonds may be secured by a bond resolution, or a trust indenture entered into by the
council with a corporate trustee within or outside the state, which must define the revenues and
bond proceeds pledged for the payment and security of the bonds. The pledge must be a valid charge
on the revenues received under section 297A.99, subdivision 11. Neither the state, nor any
municipality or political subdivision except the council, nor any member or officer or employee of
the council, is liable on the obligations. No mortgage or security interest in any tangible real or
personal property is granted to the bondholders or the trustee, but they have a valid security interest
in the revenues and bond proceeds received by the council and pledged to the payment of the bonds.
In the bond resolution or trust indenture, the council may make such covenants as it determines to
be reasonable for the protection of the bondholders.
473.4465 REGIONAL TRANSPORTATION SALES AND USE TAX USES.
Subdivision 1.Definition.For purposes of this section, "sales tax revenue" means the portion
of revenue from the regional transportation sales and use tax under section 297A.9915 that is
allocated to the council for purposes of this section.
Subd. 2.Use of funds; Metropolitan Council.(a) Sales tax revenue is available as follows:
(1) five percent for active transportation, as determined by the Transportation Advisory Board
under subdivision 3; and
(2) 95 percent for transit system purposes under sections 473.371 to 473.452, including but not
limited to operations, maintenance, and capital projects.
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APPENDIX
Repealed Minnesota Statutes: 25-00592 (b) The council must expend a portion of sales tax revenue in each of the following categories:
(1) improvements to regular route bus service levels;
(2) improvements related to transit safety, including additional transit officials, as defined under
section 473.4075;
(3) maintenance and improvements to bus accessibility at transit stops and transit centers;
(4) transit shelter replacement and improvements under section 473.41;
(5) planning and project development for expansion of arterial bus rapid transit lines;
(6) operations and capital maintenance of arterial bus rapid transit;
(7) planning and project development for expansion of highway bus rapid transit and bus
guideway lines;
(8) operations and capital maintenance of highway bus rapid transit and bus guideways;
(9) zero-emission bus procurement and associated costs in conformance with the zero-emission
and electric transit vehicle transition plan under section 473.3927;
(10) demand response microtransit service provided by the council;
(11) financial assistance to replacement service providers under section 473.388, to provide for
service, vehicle purchases, and capital investments related to demand response microtransit service;
(12) financial assistance to political subdivisions and tax-exempt organizations under section
501(c)(3) of the Internal Revenue Code for active transportation; and
(13) wage adjustments for Metro Transit hourly operations employees.
Subd. 3.Use of funds; active transportation.(a) Sales tax revenue allocated to the
Transportation Advisory Board under subdivision 2, clause (1), is for grants to support active
transportation within the metropolitan area.
(b) The Transportation Advisory Board must establish eligibility requirements and a selection
process to provide the grant awards. The process must include: solicitation; evaluation and
prioritization, including technical review, scoring, and ranking; project selection; and award of
funds. To the extent practicable and subject to paragraph (c), the process must align with procedures
and requirements established for allocation of other sources of funds.
(c) The selection process must include criteria and prioritization of projects based on:
(1) the project's inclusion in a municipal or regional nonmotorized transportation system plan;
(2) the extent to which policies or practices of the political subdivision encourage and promote
complete streets planning, design, and construction;
(3) the extent to which the project supports connections between communities and to key
destinations within a community;
(4) identified barriers or deficiencies in the nonmotorized transportation system;
(5) identified safety or health benefits;
(6) geographic equity in project benefits, with an emphasis on communities that are historically
and currently underrepresented in local or regional planning; and
(7) the ability of a grantee to maintain the active transportation infrastructure following project
completion.
Subd. 4.Use of funds; metropolitan counties; reporting.(a) A metropolitan county must use
revenue from the regional transportation sales and use tax under section 297A.9915 in conformance
with the requirements under section 174.49, subdivision 6.
(b) By February 15 of each even-numbered year, a metropolitan county must submit a report
to the chairs and ranking minority members of the legislative committees with jurisdiction over
transportation policy and finance on the use of funds received under section 297A.9915. This report
must be submitted in conjunction with the report required under section 297A.993, subdivision 2a.
At a minimum, the report must include:
(1) actual sales tax collections allocated to the county over the previous five calendar years;
2R
APPENDIX
Repealed Minnesota Statutes: 25-00592 (2) an estimation of the total sales tax revenue that is estimated to be allocated to the county in
the current year and for the next ten calendar years; and
(3) for each of the previous five calendar years, the current calendar year, and for the next ten
calendar years:
(i) the amount of sales tax revenue expended or proposed to be expended for each of the allowable
uses under section 174.49, subdivision 6;
(ii) completed, current, planned, and eligible projects or programs for each category under item
(i); and
(iii) an estimated balance of unspent or undesignated regional transportation sales and use tax
revenue.
Subd. 5.Prohibition.(a) The council is prohibited from expending sales tax revenue on the
Southwest light rail transit (Green Line Extension) project.
(b) Paragraph (a) expires on the date of expiration of the Metropolitan Governance Task Force
as specified under Laws 2023, chapter 68, article 4, section 123, subdivision 11.
Subd. 6.Tracking and information.(a) The council must maintain separate financial
information on sales tax revenue that includes:
(1) a summary of annual revenue and expenditures, including but not limited to balances and
anticipated revenue in the forecast period under section 16A.103; and
(2) for active transportation under subdivision 3 and each of the categories specified under
subdivision 2 in the most recent prior three fiscal years:
(i) specification of annual expenditures; and
(ii) an overview of the projects or services.
(b) The council must publish the information required under paragraph (a) on the council's
website.
3R
APPENDIX
Repealed Minnesota Statutes: 25-00592