Sales Tax

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Gift Exemptions

Gift Exemptions

​Quick Reference Guides: 
What you need to know:
  • A vehicle is considered a gift when it is acquired for no monetary consideration.
  • In situations where the buyer is listing a lien holder on his or her application:
    • Sales tax is due if the buyer is taking over the existing loan printed on the title. The lien holder listed on the title must submit a lien release in the name of the seller.
    • Sales tax is not due if the buyer is listing a lien because the vehicle is used as collateral for a loan not related to the acquisition of the vehicle, such as student loan. Other acceptable explanations are if the vehicle was titled in the parent's name for insurance purposes or to qualify for a loan and the child was making the payments. A written explanation must be submitted with the transfer.
 
Gift to an Individual - Eliminated (Effective 7/1/2013)
Reference: Minnesota Statutes, 297B.01, Subd. 7
The transfer of a motor vehicle by way of gift between individuals, not identified below as exempt, is no longer exempt from sales tax. Sales tax must be paid on the average value of similar motor vehicles.
 
Gift to Spouse, Parent, Child, Grandparent, Grandchild, Guardian, Ward
Reference: Minnesota Statutes, 297B.01, Subd. 8
Sales tax is not required when the vehicle is a gift between:
  • spouses
  • parent and child (includes step parent and step child)- however, if a sale occurs between parent and child, sales tax is collected on the purchase price rather than the fair market value
  • grandparent and grandchild (effective 7/1/2013) .
  • guardian and ward, when the the vehicle was titled in the name of the guardian, as guardian, only because the ward was a minor
Record exemption code #1 - and relationship, in the sales tax declaration area of the title or PS2000.
 
Gift Between Foster Parent and Foster Child
Reference: Minnesota Statutes, 297B.01, subd. 8
When the vehicle is a gift between a foster parent and foster child, the transaction is exempt from sales tax:
  • If the home is or was licensed under Minnesota Rules 9545.0010 to 9545.0260, and
  • The county verifies that the child was a ward of the state or in permanent foster care. 
Record exemption code #1 - and realationship, in the sales declaration area of the title or PS2000.