Minnesota imposes a sales tax on the purchase price of any motor vehicle purchased or acquired, either in or outside of the state of Minnesota, that is required to be registered under Minnesota Statutes, 168.
All transfers are taxed at 6.5 percent, except:
- Certain passenger vehicles that are in the tenth or subsequent year of vehicle life (see $10 In Lieu Tax), and
- Passenger vehicles and fire trucks registered in a collector class (see $150 In Lieu Tax)
The purchase price must be listed in the tax declaration area on the Minnesota certificate of title or PS2000. This is required regardless of the type of sales tax due
"Purchase price" means the total monetary consideration for a sale, whether paid in money or otherwise. If a vehicle is transferred for nominal or no monetary consideration, the purchase price is the average value of similar vehicles.
Low Purchase Price
If the purchase price declared by the buyer is significantly less than the fair market value, an explanation is required. The applicant must submit a Sales Tax Affidavit (PS2080) with the transfer of ownership.
Unless a vehicle is in need of repair, mileage is the only factor that may affect the value. Normal wear and tear (worn tires, shocks, etc.) is already taken into account by price guide books when establishing vehicle value.
To determine the fair market value:
- Check the price guide links located on ESupport. Use the lowest value when using the price guide links. Do not use the rough trade-in value.
- Check a reference book, such as NADA's Used Car Guide, and use the lowest value.
- Call the Public Information Center if you need assistance.
Specially Constructed and Manufactured (Homemade) Vehicles
The purchase price is the total amount expended for materials and labor. In the absence of actual expenditures, manufactured cost means the reasonable value of the completed vehicle. Any sales tax paid on materials purchased, may be deducted from the total sales tax due. However, the original receipts must be submitted.
To establish a value, ask the customer what the vehicle would sell for, the appraised value, or the insurance value. Do not use the receipts to establish value. Receipts represent the value of the individual part used in the construction but not the value of the finished product. Receipts may only be used to determine the amount of sales tax credit.