In Minnesota sales tax is due on most purchases or acquisitions of motor vehicles. This page will review the different sales tax scenarios which include standard rate, in-lieu, reductions, and exemptions. 

6.875 percent standard rate sales tax

This standard rate is based on the total purchase price. When a vehicle is acquired for a minimal amount of money or gifted, the sales tax is collected based on the average value of similar motor vehicles (fair market value). Only the qualifying situations listed below are exempt from sales tax or are allowed to pay a lower sales tax amount.

In-lieu sales tax  

The $10 in-lieu sales tax is collected on passenger vehicles that meet all the following criteria: 
•    The model year of the vehicle must be 10 years old or older
•    Purchase price must be under $3,000
•    The average value of similar motor vehicles is less than $3,000
The $150 in-lieu sales tax applies to passenger vehicles and fire trucks registered or applying for registration as Collector, Classic, Street Rod, or Pioneer. 

Trade-in sales tax reduction

When trading a vehicle in to a license dealer, the trade-in amount will reduce the purchase price resulting in a sales tax reduction.