Minnesota applies one of the highest statewide vehicle sales tax rates in the country at 6.875%, making it important for buyers to plan ahead. Whether you’re buying new or used, from a dealer or private party, vehicle taxes in Minnesota can add thousands to your purchase price. But there are legal ways to reduce your liability, especially on high-end vehicles.
In this article, we’ll cover how Minnesota’s Motor Vehicle Sales Tax (MVST) works, how it compares to other states, and how to legally avoid overpaying.
Minnesota Vehicle Sales Tax Overview
The 6.875% MVST is applied to the purchase price of most titled motor vehicles registered in Minnesota (Minnesota Department of Revenue – Motor Vehicle Sales Tax).
Key facts:
- Applies to dealer and private-party sales
- Tax is collected at registration through the Department of Public Safety
- Calculated after subtracting eligible trade-in value
- Does not apply to trailers, ATVs, or boats (those are taxed under general sales tax)
In addition to MVST, buyers also pay a $10 filing fee and registration tax based on vehicle age and base value.
Example: Minnesota Vehicle Sales Tax Costs
Below are revised tax estimates based on the correct 6.875% MVST rate:
| Vehicle Price | Tax Rate | Estimated Tax Owed | Total Cost with Tax |
|---|---|---|---|
| $25,000 | 6.875% | $1,718.75 | $26,718.75 |
| $40,000 | 6.875% | $2,750.00 | $42,750.00 |
| $60,000 | 6.875% | $4,125.00 | $64,125.00 |
| $90,000 | 6.875% | $6,187.50 | $96,187.50 |
How Minnesota Compares to Other States
Minnesota’s tax rate is among the highest in the U.S. for vehicle purchases. Let’s compare:
- California (Los Angeles County): 9.5% – $100,000 = $9,500 tax (California Department of Tax and Fee Administration – Rates)
- Florida (Miami-Dade): 7% with a $5,000 cap – max ~$700 tax (Florida Department of Revenue)
- New York (Yonkers): 8.875% – $100,000 = $8,875 tax (New York Department of Taxation – Sales Tax Rates)
- Montana: 0% – No vehicle sales tax (Montana Department of Justice – Vehicle Registration)
By registering in a state like Montana through a compliant entity, buyers can legally save thousands on sales tax.
Vehicle Tax Exemptions in Minnesota
Minnesota offers several MVST exemptions:
- Transfers between immediate family members
- Gifts (when properly documented)
- Inheritances
- Divorce or court-ordered transfers
- Nonprofit and government agency transfers
To claim an exemption, you must provide a gift affidavit, death certificate, or court documentation at registration (Minnesota DVS – Vehicle Title Transfers).
10 Ways to Reallocate Your Tax Savings
If you save thousands on sales tax, here are high-impact ways to reinvest:
- Upgrade to a higher trim or performance package
- Purchase paint protection or ceramic coating
- Buy an extended warranty or service plan
- Install custom wheels, lift kits, or off-road gear
- Upgrade your interior or infotainment system
- Buy trailer or RV equipment
- Cover a year of insurance and registration
- Fund a long-distance driving trip
- Set aside for your next vehicle
- Invest in resale value with preventive maintenance
Why Use Ride Legal
At Ride Legal, we help Minnesota buyers legally register their vehicles in Montana, where the sales tax rate is 0%. We handle all paperwork, LLC formation, title services, and compliance to save our clients thousands on high-value purchases.
Perfect for:
- RVs and motorhomes
- Supercars and exotic vehicles
- Classic or collector cars
- Fleet and business vehicles
Thousands have used our process to legally eliminate vehicle sales tax and keep more of their hard-earned money.
Frequently Asked Questions About Minnesota Vehicle Sales Tax
Q: What is the sales tax rate on vehicles in Minnesota?
A: Minnesota charges 6.875% on the taxable sales price of most vehicles (Minnesota House of Representatives – MVST).
Q: Does MVST apply to private party sales?
A: Yes. The tax applies to both dealer and private transactions.
Q: Are trade-ins deductible?
A: Yes, but only on dealer transactions.
Q: Are there any local sales taxes?
A: No. MVST is statewide at 6.875%, but registration fees vary by vehicle.
Q: Can I legally avoid MVST?
A: You may qualify for exemptions or use a Montana LLC structure for legal out-of-state registration.
Keep More of Your Money in the Land of 10,000 Lakes
Minnesota’s 6.875% MVST can add thousands to your vehicle’s true cost. Ride Legal helps you keep that money in your pocket with proven, legal strategies.
Visit www.ridelegal.com to start your savings today.
