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How governor's tax plan affects vehicle buyers

  • Blog Post by: Lori Sturdevant
  • February 6, 2013 - 3:40 PM

Paul of Minneapolis asked: Would Gov. Mark Dayton's proposed sales tax rate reduction apply to the motor vehicle sales tax, or MVST? And if so, how much would I save on a $25,000 car?

Sorry, Paul. The governor's plan wouldn't help you pay for the sun roof or leather upholstery you want on that new car. His proposal to reduce the state's sales tax rate to 5.5 percent does not include MVST.

Though the name of the state tax on vehicle purchases was changed a few years ago from "motor vehicle excise tax" to "motor vehicle sales tax," it continues to exist apart from the general sales tax in statute and in the state Constitution. (Voters constitutionally dedicated MVST to transportation purposes in 2006.) That distinction explains why its current rate is 6.5 percent, not the sales tax's 6.875 percent. The 0.375 percent Legacy Amendment for natural resources and the arts, enacted in 2008, applies to the sales tax but not MVST.

If the MVST rate were reduced to 5.5 percent, Paul could save $250 on that $25,000 base-price new or used car. For more details about the Dayton sales tax plan, click here.

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