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Motor Vehicle Guide
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Nontaxable Transactions

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Some vehicle transactions are exempt from Motor Vehicle Tax.

Motor Vehicle Tax Exemptions

Some transactions are exempt from Motor Vehicle tax depending on who purchases the vehicle, as listed in the table below. For these sales, you must keep on file Form PS2000, Application to Title/Register a Vehicle, showing the exemption code.

Who is the customer?

They can buy the following vehicles exempt from Motor Vehicle Tax

Ambulance service

Ambulances sold or leased to an ambulance service (public or private) licensed under Minnesota Statutes 144E.10, including accessory items to initially equip the vehicle and repair and replacement parts.

See Emergency Services.

Disabled veterans

Any vehicle when the purchaser has grant assistance under U.S. Code, title 38, section 3902

Starting July 1, 2024, purchases of a motor vehicle by a veteran having a total service-connected disability are exempt from the Motor Vehicle Sales Tax.

Federal government and its agencies

All vehicles (purchased, leased, or rented)  

Federally Qualified Health Center

Vehicles used only as mobile medical units for providing medical and dental services by a federal qualified health center. Leases of these vehicles are taxable.

Library

Vehicles used as bookmobile or delivery vehicle

Metropolitan Transit Council

Buses (purchased or leased)

Municipal fire department

Fire trucks, pumper trucks, hook and ladder trucks, and clearly marked trailers, including:

  • items used to assemble or initially equip the vehicle
  • items permanently attached to the qualified vehicle

See Emergency Services.

Nonprofit group

Trucks, buses, or automobiles primarily designed to carry at least 10 people. See Nonprofit Organizations.

Police department

Marked police patrol vehicles, including accessory items used to initially equip the vehicle

Private non-profit or public school

Vehicles used as instructional aids in a vehicle body and mechanical repair course

Note: This exemption does not include vehicles used in driver education programs

Public or private transit operations

Vehicle used for transit services.

Vehicles used to provide transportation services for the elderly or disabled may also qualify. To qualify, the provider must receive financial assistance or reimbursement under Minnesota Statute 174.24 or 473.384, or operate under Minnesota Statute 174.29, 473.388, or 473.405.

Ready-mix producer

Ready-mix concrete trucks

Township

Snowplows, dump trucks, and other motor vehicles used only for road maintenance

Note: This exemption does not include automobiles, vans, or pickup trucks and does not apply to purchases by other local governments.

Volunteer fire department

Fire trucks, pumper trucks, hook and ladder trucks, trailers, or components used to assemble these vehicles, including components to assemble these vehicles, accessories, replacement parts, and repair parts. See Emergency Services.

Vehicle Disability Accessible Modifications

Charges for parts, accessories, and labor to make a vehicle disability accessible are not taxable.

To claim this exemption when buying a vehicle, the applicant must provide a statement describing the modifications and the value. Attach the statement to the application for title of the vehicle.

If the modifications are made after the purchase, the purchaser or owner must give the vendor a completed Form ST3, Certificate of Exemption.

Nontaxable Motor Vehicle Transfers

The following title transfers are not taxable: 

  • By inheritance, including transferring a motor vehicle inherited upon death
  • From joint tenancy to one of the joint tenants for no monetary consideration
  • From an individual into the individual’s revocable trust.
  • Between husband and wife in a divorce proceeding
  • By gift between:
    • Spouses
    • Parents and a child
    • Grandparents and a grandchild

No affidavit is required when a gifted motor vehicle is transferred between these relatives.

  • Between related companies as defined in Internal Revenue Code sections 118, 331, 332, 336, 337, 351, 355, 721, 731, 1031, 1033, or 1563(a). For more information, see Fact Sheet 132, Isolated and Occasional Sales.
  • A gift to a 501(c)(3) nonprofit organization when the motor vehicle is used exclusively for religious, charitable, or educational purposes
  • A gift from a limited used vehicle dealer licensed (nonprofit charitable organization) to an individual – if there is no monetary or other consideration, or the expectation of consideration. The transferring parties must sign an affidavit when transferring the title.

Motor Vehicles Purchased in Other State

If you bought and titled your vehicle under your name for at least 60 days in the other state, tax is not due when you register the vehicle in Minnesota.

If a Minnesota resident registered and paid sales tax to another state, Minnesota allows credit for tax paid to the other state. If the other state’s tax rate is lower, then tax is due on the difference in rates to Minnesota.

Buying For Resale

If a buyer has a dealer’s or lessor’s license and is in the business of selling or leasing vehicles, the purchase for resale is not taxable. Without a dealer’s license, individuals cannot purchase a motor vehicle exempt for resale.

The type of dealer’s license the buyer has restricts what vehicles they can buy for resale. For example, a person licensed as a used car dealer cannot buy a new car exempt for resale. For more information, contact the Dealer’s Unit of the Department of Public Safety at 651-201-7800.

Dealer Plates

Motor vehicle dealers must place dealer plates on any vehicle they buy for resale and use for demonstration purposes, which include use by:

  • the dealer, dealer's spouse, or any full-time employee of the dealership
  • a part-time employee for business purposes of the dealer
  • prospective buyers

It is illegal to use dealer plates on vehicles that are used for other purposes such as loaner vehicles, tow trucks, service trucks, or parts vehicles.

Interstate Motor Carriers

Interstate truckers may have a Motor Carrier Direct Pay authorization that allows them to pay a prorated tax on their vehicle when it is registered with the Department of Public Safety. See Transportation Service Providers.

Off-Road Vehicles

If vehicles are not registered for road use, they are not subject to the Motor Vehicle Sales Tax. See Off-Road Vehicle.