If you‘re planning to buy a used car in Minnesota, sales tax and other fees can add to your total cost. Forewarned is forearmed; let’s see what you’ll owe in taxes and fees.
Minnesota’s vehicle sales tax is called the Motor Vehicle Sales Tax (MVST), and it is 6.5% of the vehicle’s purchase price. In addition to the MVST, you will also owe registration, title transfer, and license plate fees.
Do You Pay Taxes When You Buy a Car From a Private Seller in Minnesota?
When buying a car from a private seller in Minnesota, you owe 6.5% of the vehicle's purchase price in MVST. The MVST is collected by deputy registrars when you register your vehicle with the Minnesota Driver and Vehicle Services (DVS).
Minnesota Vehicle Excise Tax
In many states, cities or counties (or both) can levy local sales taxes on top of the state’s flat car sales tax rate. Minnesota is no different: many counties add an “excise tax” to vehicle purchases. Confusingly, the state goes so far as to declare that there are no local Minnesota sales taxes on vehicle purchases—but there are excise taxes. Same thing, different name. A tax is a tax.
To make the Minnesota tax system even more, ahem, interesting, DVS collects local tax on behalf of some counties, while other counties collect their own tax. If you live in one of the following counties, you’ll pay all your taxes to DVS when you register your vehicle. If you’re not in one of the following counties, you’ll pay the state’s 6.5% to DVS and your county’s portion to—your county. We recommend making an inquiry at your county clerk or local DVS office to find out more.
Minnesota Sales Tax for Older Cars
Most low-value cars are subject to different tax rules. The 6.5% sales tax does not apply to passenger vehicles that are at least ten years old, or to collector vehicles.
- If you bought a passenger vehicle 10 model years old or older for less than $3,000, a $10 tax is collected.
- If you bought and registered a collector, classic, or pioneer passenger vehicle, you pay $150 in tax, regardless of the purchase price.
Minnesota Title and License Plate Fees
Beyond the purchase price and sales tax, there are other fees involved with purchasing a car in Minnesota. Unless you meet an exemption, tax is due every time you transfer a vehicle’s title in Minnesota.
Here’s what that will cost you:
- Vehicle title transfer: $8.25 (duplicate title is $7.25)
- Public safety vehicle fee: $3.50
- New license plates: $15.50 ($13.50 for a single plate; single plates are available only for 1972 and older, and collector vehicles)
- Technology surcharge: $2.25 (due with every change to the title, unless the only change is adding or removing a lien holder)
If you fail to title your newly purchased vehicle within 10 business days of the sale, you’re subject to a $2 late transfer penalty.
For more fees involved with vehicle titles and license plates, refer to the official Minnesota Driver and Vehicle Services fee chart.
How Much is Vehicle Registration in Minnesota?
In a private party sale, you pay the car tax when you register the vehicle, at which time you’ll also pay for Minnesota registration. The registration fee is determined by the vehicle’s base value and age.
To register a vehicle, go to your local DVS office with the following documentation:
- Original vehicle title
- A completed Notification of Assignment – Release or Grant of Secured Interest (Form PS2017), if the title shows a lien that has been satisfied
- Proof of identification
- Vehicle odometer reading
- Proof of insurance
- A completed Application to Title and Register a Motor Vehicle (Form PS2000).
How is Used Car Sales Tax Calculated in Minnesota?
In Minnesota, sales tax on used cars is calculated based on the vehicle's purchase price. If you’re buying the car from a private party, you owe sales tax, the same as if you went to a dealership. The Minnesota tax code makes no distinction between private-party and dealer transactions.
Some people get the brilliant idea to negotiate a low “official” purchase price and pay the remainder in a side transaction, thinking they’ll get out of paying a chunk of taxes. That won’t work, as the DVS is way ahead of you.
If the DVS suspects that the purchase price of the vehicle was artificially decreased, they will calculate sales tax based on the car’s fair market value. The DVS establishes what the car is worth on the open market by referring to the Kelley Blue Book, Edmunds, or other reliable sources of information about used car prices. If the DVS concludes that the car's fair market value is greater than the selling price, the sales tax can be assessed based on the fair market value.
How to Pay Minnesota Vehicle Sales Tax
How to Pay Minnesota Vehicle Sales Tax
Here's how to pay car sales tax in Minnesota after buying a used car from a private seller:
- You and the seller must complete the necessary paperwork to transfer ownership of the vehicle, including the vehicle bill of sale (when you buy a car on PrivateAuto, we provide an official Minnesota bill of sale and prompt both of you to sign it in our app at the appropriate stage of the transaction process). To transfer vehicle ownership in a private transaction, you’ll need the following documents:
- The original car title with an odometer reading and the seller’s signature
- The buyer’s valid driver’s license or IDs
- Calculate the amount of sales tax you owe. In Minnesota, the sales tax amount for a car is determined by multiplying the price of the car by the current state sales tax rate. For example, if you buy a $10,000 car, the sales tax would be $650 ($10,000 times 0.065), plus any local tax due depending on the county you live in.
- Sign the Application to Title or Register a Vehicle. You will need to show proof of insurance and to fill out the Odometer Disclosure Statement on the application.
- Submit payment for all taxes and fees.
- Once you've paid the sales tax and turned in the necessary paperwork, you'll get your new registration and title. The title and registration will show that you bought the car and that the sales tax has been paid. You will also get new license plates.
If you buy a car in a state that levies no sales tax and register it in that same state, you won’t pay Minnesota sales tax if you later register it in Minnesota—so long as the car was used in the original state for at least 60 days. If you immediately register your new-to-you car in Minnesota after purchasing it in another state, you’ll pay the Minnesota sales tax.
To pay your sales tax online, refer to the official Minnesota state guide.
Car Sales Tax Calculator
If you’re in the market for a used car, you need to figure out how much sales tax you owe. While you don’t have to be a rocket scientist to calculate taxes, it can be a hassle to get to the bottom of your total sales tax amount.
With PrivateAuto’s used car sales tax calculator, figuring out sales tax has never been easier. This free online tool makes it hassle-free to calculate how much tax you have to pay on a used car purchase based on the purchase price of the car.
Can I Avoid Paying Sales Tax on a Car in Minnesota?
There’s no way around it: property taxes, income taxes, sales taxes, and other taxes are part of life. You must pay sales tax when you buy a private-party vehicle in Minnesota unless you meet an exemption.
Minnesota Motor Vehicle Sales Tax Exemptions
Certain individuals and organizations are exempt from paying the MVST. These tax exemptions apply only to sales taxes and not to other fees related to buying a used car, such as registration or title costs.
Here are some sales tax exemptions for used vehicle purchases in Minnesota:
- Purchases made by the federal government and its agencies are exempt.
- Transit providers for transit service are exempt from paying the sales tax.
- Educational institutions that use automotive training programs are exempt from paying the sales tax.
- Individuals who resided outside the state of Minnesota for at least 60 days prior to becoming a Minnesota resident are exempt if the vehicle had previously been registered elsewhere.
- Motor vehicle transfers between spouses, parents, children, grandparents, and grandchildren are not subject to the MVST if the transfer is a gift (read our article on transferring car ownership between family members for more on this topic).
- Inherited vehicles are not charged sales tax.
- Transfers between spouses in a divorce proceeding are not subject to sales tax.
- MSVT is not charged on vehicles purchased by disabled veterans.
Is Buying from a Dealer Better?
Many people think buying from car dealers is a great way to avoid hassle (and perhaps a fee here and there). In fact, when you go to a dealer, you end up paying more.
When you buy a car from a dealer, you pay all the same taxes and fees that you’d pay if you bought it from a private party. Dealers have a way of rolling it all up in the fine print, but the charges are still there.
Perhaps more significantly, nine times out of ten, you’ll pay more for a used vehicle when you buy it from a dealer compared to buying the same vehicle from a private seller. Cut out the middleman and get the best price possible by transacting peer-to-peer on PrivateAuto.
Additionally, dealerships charge a "documentation fee" above and beyond all the other taxes and fees you have to pay. The documentation fee in Minnesota is a maximum of $275 for 2023, effective July 1.
We do admit that dealers bring a certain amount of convenience that you don’t traditionally get when you buy from a private seller. In fact, that’s why PrivateAuto exists. We give you dealer-like convenience while enabling peer-to-peer transactions with regular folks like yourself.
Avoid documentation fees and get lower prices when you shop used cars from private sellers right here on PrivateAuto.
Buy and Sell Used Cars on PrivateAuto
Conduct private car transactions easily and safely with PrivateAuto. Our innovative platform connects buyers and sellers and gives them all the tools to complete the deal, from in-app financing to secure messaging to integrated payments.
PrivateAuto allows you to negotiate the price you want, schedule the test drive meetup, and pay for the car—all within our app without compromising your personal information.
Whether you want to buy a vehicle or are trying to sell your used vehicle for top dollar, PrivateAuto will help you get the deal done.
Here’s how you can sell your car in Minnesota with a few simple steps:
- Gather necessary documentation
You’ll need your vehicle title and other documentation. Have all the paperwork you need to sell your car privately, so you’re not scrambling to find it at the moment of completing a sale.
2. Register on PrivateAuto and get verified
To make PrivateAuto a safe place for everyone, we require email, phone, and driver’s license verification, including facial recognition.
3. List your car
Easily create your PrivateAuto listing with our step-by-step guide. Bonus: we include a window brochure with a QR code scannable to your listing.
4. Set your terms
It’s your car, so you drive the deal! You can control where, when, and who you meet. Decide whether to accept only ID-verified buyers, or buyers with verified funds. Don’t waste your time with buyers who aren’t verified according to your preferences.
5. Vet incoming offers
Manage offers in one place with the ability to accept, reject, or counter offers within the app. Listing on multiple sites? Filter all communications through PrivateAuto by sharing your listing link on all platforms. Your personal info is protected: no more giving out your phone number or email address. All communication happens in our app.
6. Choose a buyer
When you find an offer you like, accept it and proceed to the next step with that buyer.
7. Schedule a meeting
The buyer will want to look at your car. No more back-and-forth texts. You never have to give out your phone number. Rather, use our handy scheduling feature to schedule test drives and coordinate a time and place for meetings. (Oh, and you’ll be able to finalize the transaction instantly at the first meeting, FYI.)
8. E-sign documents
After the buyer is satisfied with your car and the two of you have agreed on a purchase price, you can easily e-sign the bill of sale within our app, from your phone. With our shared documents feature, you can easily locate the paperwork needed after the sale.
9. Get paid, instantly
Before PrivateAuto, receiving funds was the most stressful part of the entire selling process, especially for any used car sale over $5,000. There just aren’t a lot of good ways to move large amounts of money quickly and conveniently. Those days are over! Verify and receive funds instantaneously with PrivateAuto Pay, our innovative banking integration. Guaranteed funds for transactions large and small.
10. Transfer title
When you sell your vehicle, fill out the necessary information on the back of the Certificate of Title and sign in order to transfer ownership of the vehicle to the new owner.
Minnesota Used Car Sales Tax FAQ
How do you get around sales tax on a car?
The easiest way to avoid car sales tax is to live in a place that doesn't charge it. There are five states in the US that charge no sales tax on motor vehicle purchases, whether you buy a used or new car. The car tax rate in Montana, Oregon, Delaware, New Hampshire, and Alaska is zero, so residents of these states avoid paying sales tax.
Nevada does not charge sales tax on private vehicle purchases, even though it does on dealership transactions.
If you’re registering your car in a state that’s not one of the above, buying a car in a tax-free state won’t get you off the hook. You’ll still pay your state’s sales tax when you bring it back and register it.
Another way to legally avoid paying sales tax is to qualify for an exemption.
You may not be able to avoid sales tax, but you can save thousands of dollars if you steer clear of dealerships. In some states, car dealers charge a documentation fee of up to $400. With PrivateAuto, you get to buy used vehicles from regular folks that are just looking to get a decent price for their cars, without making you spend more.
Does Minnesota require vehicle inspection?
Personal vehicles do not have to go through regular safety checks in Minnesota. If you own a commercial vehicle, you do need to get regular safety checks. Even if you don't need a regular safety inspection to get your car registered, you should still make sure it's in good shape.
Our vehicle inspection guide for used cars covers all the important aspects of getting your used vehicle a safety inspection, so make sure you don’t miss it.
How long does it take to register a car in Minnesota?
Once you’ve submitted the necessary documentation in person or by mail, the DVS takes up to 10 days to process the vehicle registration. Minnesota residents will receive their new registration and license plates via mail.
Do you need 2 plates in MN?
Cars in Minnesota must have plates on both the front and back. It is against Minnesota law to drive without two license plates.
Section 169.79 of Minnesota state law says that most cars must have two license plates that are clearly visible from the front and back when they are registered. The license plate holder or cover can’t get in the way of seeing both plates clearly. In addition, you should keep your plates clean and free of things that might blur the picture, such as dust, grease, and snow.
The law also covers personalized license plates and special plates, like tags for people with disabilities or tags for veterans. If you have special license plates, you must show two of them clearly.
Why does Minnesota require two license plates?
Minnesota requires two license plates to enable police to more easily run plates, which helps them find stolen cars and criminals. If a police officer needs to look up information about a vehicle, they can get the plate number from the front or back of the car.
There are some exemptions to the two-plate requirement:
- Semi trailers and trailers that weigh more than 3,000 pounds
- Cars used on farms
- Scooters or mopeds
- Cars with dealer plates
- Collector cars
Why does Minnesota require new license plates every seven years?
In Minnesota, license plates for passenger cars need to be replaced every seven years. All other license plates are issued for the life of the vehicle.
Minnesota plates are made from aluminum with maplewood-based 3M covers and a thin, high-definition sheeting that helps them reflect light for low-light visibility. If the covering comes off, the plates can lose their shine and become difficult to read. The film covering the plates comes with a five-year guarantee, and the reflective properties begin to decline because of exposure to the elements and road salt. That’s why the Minnesota law requires a new set of license plates after seven years of use.
Can you drive a car with a salvage title in Minnesota?
In Minnesota, a salvage title vehicle can't be registered or driven on the road unless it passes a salvage inspection. The purpose of a salvage inspection is to stop people from fixing up broken cars with stolen parts. The inspector checks to see if the car still has most of its original parts. Original receipts must be kept for any parts that are replaced.
How much does a license cost in Minnesota?
A regular or under age 21 Class B driver’s license costs $42.25. A Class C driver’s license, regular or under age 21, costs $35.25. If you need a duplicate license, you’ll pay $17.
Find more information about license fees on the official DVS website.
Who pays sales tax in MN?
In a private car sale in Minnesota, the buyer is responsible for paying sales tax. The tax is based on the car’s purchase price, and the buyer must pay it directly to the Minnesota Department of Public Safety (DPS) Driver and Vehicle Services (DVS) when they register the vehicle.
What is the most expensive state to buy a car?
California is the most expensive state to buy a car because the average cost of cars there is higher than in many other states. According to an iSeeCars.com analysis, the average one-to-five-year-old car cost around $33,600 in December 2022.
In California, the exact same vehicle with the same year, mileage, condition, make, and model can cost more than it does in states like Massachusetts, Ohio, or Minnesota. Factors like supply and demand, local market conditions, and the high cost of living in California can all work against you.
Sales taxes can affect the total cost of car acquisition. California sales taxes are a staggering 7.25%, plus applicable city and county sales taxes, which only increase the amount of the total sales tax rate.
Sales taxes vary wildly from state to state. When you get a state with a higher cost of living combined with a high sales tax, you have a formula for more expensive car purchases.
The so-called NOMAD states—New Hampshire, Oregon, Montana, Alaska, and Delaware—charge no sales tax on motor vehicle purchases. Nevada has a sales tax, but only on dealership transactions. When you buy a used car from a private party in Nevada, you don’t owe sales tax.