Pre-owned motor vehicles sales tax exemption establishment

A bill for an act

relating to taxes; creating an exemption from the motor vehicle sales tax for the

sale of preowned motor vehicles; amending Minnesota Statutes 2024, sections

297A.67, by adding a subdivision; 297B.01, by adding a subdivision; 297B.03.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 297A.67, is amended by adding a subdivision

to read:

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Subd. 30a.

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Preowned motor vehicles.

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Preowned motor vehicles, as defined in section

297B.01, subdivision 13a, that are exempt from taxation under chapter 297B are exempt.

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EFFECTIVE DATE.

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This section is effective for sales and purchases made after June

30, 2026.

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Sec. 2.

Minnesota Statutes 2024, section 297B.01, is amended by adding a subdivision to

read:

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Subd. 13a.

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Preowned motor vehicle.

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"Preowned motor vehicle" means any motor

vehicle that has been previously sold at retail, titled, registered, leased, or otherwise

transferred to a person and that has been operated or placed into service prior to the current

sale or transfer. For resale purposes, a motor vehicle must be deemed preowned regardless

of mileage if it has been previously titled or registered to a person or entity other than a

manufacturer, distributor, or dealer licensed under section 168.27.

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EFFECTIVE DATE.

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This section is effective for sales and purchases made after June

30, 2026.

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Sec. 3.

Minnesota Statutes 2024, section 297B.03, is amended to read:

297B.03 EXEMPTIONS.

There is specifically exempted from the provisions of this chapter and from computation

of the amount of tax imposed by it the following:

(1) purchase or use, including use under a lease purchase agreement or installment sales

contract made pursuant to section
465.71
, of any motor vehicle by the United States and its

agencies and instrumentalities and by any person described in and subject to the conditions

provided in section
297A.67, subdivision 11
;

(2) purchase or use of any motor vehicle by any person who was a resident of another

state or country at the time of the purchase and who subsequently becomes a resident of

Minnesota, provided the purchase occurred more than 60 days prior to the date such person

began residing in the state of Minnesota and the motor vehicle was registered in the person's

name in the other state or country;

(3) purchase or use of any motor vehicle by any person making a valid election to be

taxed under the provisions of section
297A.90
;

(4) purchase or use of any motor vehicle previously registered in the state of Minnesota

when such transfer constitutes a transfer within the meaning of section 118, 331, 332, 336,

337, 338, 351, 355, 368, 721, 731, 1031, 1033, or 1563(a) of the Internal Revenue Code,

as amended through December 16, 2016;

(5) purchase or use of any vehicle owned by a resident of another state and leased to a

Minnesota-based private or for-hire carrier for regular use in the transportation of persons

or property in interstate commerce provided the vehicle is titled in the state of the owner or

secured party, and that state does not impose a sales tax or sales tax on motor vehicles used

in interstate commerce;

(6) purchase or use of a motor vehicle by a private nonprofit or public educational

institution for use as an instructional aid in automotive training programs operated by the

institution. "Automotive training programs" includes motor vehicle body and mechanical

repair courses but does not include driver education programs;

(7) purchase of a motor vehicle by an ambulance service licensed under section
144E.10

when that vehicle is equipped and specifically intended for emergency response or for

providing ambulance service;

(8) purchase of a motor vehicle by or for a public library, as defined in section
134.001,

subdivision 2
, as a bookmobile or library delivery vehicle;

(9) purchase of a ready-mixed concrete truck;

(10) purchase or use of a motor vehicle by a town for use exclusively for road

maintenance, including snowplows and dump trucks, but not including automobiles, vans,

or pickup trucks;

(11) purchase or use of a motor vehicle by a corporation, society, association, foundation,

or institution organized and operated exclusively for charitable, religious, or educational

purposes, except a public school, university, or library, but only if the vehicle is:

(i) a truck, as defined in section
168.002
, a bus, as defined in section
168.002
, or a

passenger automobile, as defined in section
168.002
, if the automobile is designed and used

for carrying more than nine persons including the driver; and

(ii) intended to be used primarily to transport tangible personal property or individuals,

other than employees, to whom the organization provides service in performing its charitable,

religious, or educational purpose;

(12) purchase of a motor vehicle for use by a transit provider exclusively to provide

transit service is exempt if the transit provider is either (i) receiving financial assistance or

reimbursement under section
174.24
or
473.384
, or (ii) operating under section
174.29
,

473.388
, or
473.405
;

(13) purchase or use of a motor vehicle by a qualified business, as defined in section

469.310
, located in a job opportunity building zone, if the motor vehicle is principally

garaged in the job opportunity building zone and is primarily used as part of or in direct

support of the person's operations carried on in the job opportunity building zone. The

exemption under this clause applies to sales, if the purchase was made and delivery received

during the duration of the job opportunity building zone. The exemption under this clause

also applies to any local sales and use tax;

(14) purchase of a leased vehicle by the lessee who was a participant in a lease-to-own

program from a charitable organization that is:

(i) described in section 501(c)(3) of the Internal Revenue Code; and

(ii) licensed as a motor vehicle lessor under section
168.27, subdivision 4
;

(15) purchase of a motor vehicle used exclusively as a mobile medical unit for the

provision of medical or dental services by a federally qualified health center, as defined

under title 19 of the Social Security Act, as amended by Section 4161 of the Omnibus Budget

Reconciliation Act of 1990;
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and
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(16) purchase of a motor vehicle by a veteran having a total service-connected disability,

as defined in section
171.01, subdivision 51
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; and
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(17) purchase or use of a preowned motor vehicle
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.

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EFFECTIVE DATE.

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This section is effective for sales and purchases made after June

30, 2026.

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