Buying a car in Minnesota

Sales tax on a car in Minnesota

Minnesota charges a state motor vehicle sales tax of 6.875% on vehicle purchases.

Local sales tax does not apply to vehicle sales, but a $20 local vehicle excise tax is collected on vehicles sold in counties and cities that impose one.

The tax is paid to a deputy registrar or Driver and Vehicle Services when the title is transferred. State law sets a flat $10 tax in place of the percentage tax for certain older passenger automobiles and a flat $150 tax for certain collector vehicles.

Does a trade-in lower the tax?

The taxable price is the vehicle sales price minus any rebates and the trade-in allowance when the seller takes a motor vehicle in trade.

Example, state tax only. On a $30,000 car with a $10,000 trade-in, the taxable amount is $20,000, so the state tax is about $1,375. Without the trade-in it would be $2,063. Local taxes and fees are extra.

Dealer doc fees in Minnesota

For sales or leases on or after July 1, 2025, the documentary fee may not exceed the lesser of $350 or 10% of the value of the sale or lease. The fee must be stated separately on the sales agreement and does not adjust automatically.

The documentation fee is not taxed.

Whatever the rule, the fee is part of your out-the-door price. Ask for it in the written quote and negotiate the total, not the line. See dealer fees explained.

Title and registration

Titles and registrations are handled by the Minnesota Department of Public Safety, Driver and Vehicle Services. Except in special situations, the transfer of ownership must take place on the certificate of title within 10 days of the date of sale. Transfers can be made at deputy registrar offices.

Also worth knowing

• The Minnesota Department of Revenue says dealers should not charge motor vehicle sales tax on registration, license, and document fees or on extended warranties.
• The documentary fee does not include an optional electronic transfer fee, which is a separate charge.

Sources

1. Minnesota Statutes 297B.02: Motor vehicle sales tax imposed (revisor.mn.gov)
2. Minnesota Department of Revenue: Motor Vehicle Sales (revenue.state.mn.us)
3. Minnesota Statutes 168.27, subdivision 31: Documentary fee (revisor.mn.gov)
4. Minnesota Driver and Vehicle Services: Buying or Selling a Motor Vehicle (March 2025) (assets.dps.mn.gov)

Last checked Nov 10, 2026; next review by Feb 10, 2027. This page explains how the rules generally work and is not tax or legal advice. Rules change, so confirm with the state. Report an error.