Minnesota Car Sales Tax
In Minnesota, the statewide sales tax is 6.5% on all car purchases, both new and used. The average combined state and county sales tax for car sales is 7.384%.
Written by Zachary Morgan
Reviewed by Jessica Barrett
The Minnesota state tax rate of 6.5% is applied to all vehicles sold in the Gopher State, but the total tax rate will vary from place to place. County and local taxes can make the rate as high as 8.875% or as low as 6.875%. The average total car sales tax in Minnesota is 7.384%.
If you’re thinking about getting a new car, you probably already know that there are additional payments you’ll have to make beyond the sticker price. One of these hidden figures is car sales tax, which will vary depending on where exactly you purchase the vehicle.
The car sales tax rate in Minnesota is on the higher side of average, but you have to factor in where you live to determine exactly what you’ll pay. That’s why
Jerry
, the top-rated car insurance
app, created this guide to car sales tax in Minnesota. Let’s dive in and learn how to find cheap car insurance in Minnesota
, too!How much is the car sales tax rate in Minnesota?
In Minnesota, the statewide sales tax is 6.5% on all car purchases, both new and used. In addition, you’ll have to pay county or local sales tax on top of the standard 6.5%.
The parts of the state with the highest sales tax rates are St. Louis, Cass, and Hubbard counties, where buyers will pay combined rates as high as 8.875%. Luckily, the expensive counties are outnumbered by the cheaper ones. Cottonwood, Lincoln, Big Stone, Traverse, Lac qui Parle, Stevens, and Woods counties offer combined rates as low as 6.875%.
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How are car trade-ins taxed in Minnesota?
So what does sales tax apply to in Minnesota? If you’re buying a car, most dealerships give you the option of trading in your old vehicle and applying the credit towards your new one. This will save you money because in Minnesota car sales tax doesn’t apply to trade-in value.
For example, say you’re trading in a
Ford Ranger
for a $2,000 credit towards a new Honda Civic
worth $22,000 in Moorhead
. The local tax rate in Clay County is 0.5%, so you would pay a 7% combined tax rate on the $20,000 purchase.Keep in mind that dealer rebates and incentives are not exempt from sales tax, meaning that the taxable price of your vehicle is the price before dealer incentives are factored in. For rebates, you still pay the sales tax as though you were paying full price for the vehicle.
How to calculate sales tax on a car in Minnesota
The Minnesota Department of Revenue makes it easy to determine car sales tax. The
reference sheet
on their website can help you get an idea of your final payment after trade-ins and rebates are accounted for. The sheet doesn’t include local tax rates, though, so determine your local rate and add it to the statewide rate of 6.5% to see your exact payment amount.Key Takeaway Combine the statewide sales tax of 6.5% with your local or county sales tax to get the total car sales tax in your area.
Exemptions from Minnesota car sales tax
Most car purchases in Minnesota are subject to sales tax, but certain circumstances allow you to apply for an exemption. The Minnesota Department of Revenue’s
ST3 Exemption Certificate
describes a variety of situations where you can apply for tax exemption, including:- Transfers on vehicles given as a gift between direct family members
- Vehicles acquired in a divorce proceeding
- Vehicles purchased and used by nonprofits
- If you were not a resident of Minnesota at the time of purchase
- Vehicles purchased for resale by a licensed buyer
MORE: Car inspection in Minnesota
How to estimate Minnesota tax, title, and registration fees
Aside from sales tax, there are a few other costs you’ll have to consider when buying a car in Minnesota. You’ll need to pay the fees for title and
vehicle registration
as well as the license plate transfer. Most dealerships also charge a documentation fee.Here’s what the additional costs look like:
Cost | Average cost |
|---|---|
Sales tax | 7.384% |
Registration fee | $10 plus 1.25% of vehicle’s base value |
Title fee | $8.25 |
Plate transfer | $15.50 |
Documentation fee | maximum of $100 |
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MORE: Is car insurance tax deductible?
How to find affordable car insurance in Minnesota
After you’ve calculated your tax rate and paid your fees, there’s still one thing left to do—get yourself some
car insurance
. We know the last thing you want to think about is another payment, that’s why Jerry
is here to help you save money on your insurance premium.Using Jerry will be the easiest thing you do all week—just download the app and enter your information. Within a minute, Jerry will generate a completely personalized list of quotes from 50+ top-rated insurance carriers—no long phone calls or tedious paperwork. If you see a policy you like, we can even help you cancel your old one.
The best part? Jerry users save an average of $887 a year on their car insurance!
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How much is sales tax on a used car in Minnesota?
The sales tax is the same for both new and used vehicle purchases—the statewide base rate of 6.5% plus local or county tax rate.
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