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Taxation of Motor Fuels Used in Motorboats
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Petroleum Tax Fact Sheet 800
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Motor fuels used in motorboats are subject to the Minnesota motor fuels excise taxes.
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The motor fuels excise tax applies to all gasoline and undyed diesel fuel used to propel a boat.
All marine gasoline received, sold, stored or withdrawn from storage in Minnesota is taxed at the same rate per gallon and in the same manner as the gasoline excise tax.
Gasoline used in motorboats is taxable and nonrefundable.
If you paid petroleum taxes on fuel used to propel a boat while it is being used for a qualifying business use, you may qualify for a refund of the taxes paid.
If undyed diesel fuel is used to propel a boat for an off-highway business use, the person who purchased and used the fuel may be allowed to claim a refund of taxes paid.
Off-highway business use means any use off the public highway by a person in that person's trade, business, or activity to produce income.
Note: You are not eligible for a refund if the fuel is used to propel a boat for personal use. Additionally, dyed diesel fuel is not allowed to be used to propel a boat for personal use.
To claim a refund, complete and file Form PDR-1, Minnesota Motor Fuel Claim for Refund, within one year from the date of purchase.
Dyed diesel fuel used to propel a boat for a qualifying off-highway business use may be subject to Minnesota Sales and Use Tax.
If you receive a refund of petroleum taxes paid, you may be required to pay Minnesota Sales and Use tax on those purchases, unless specifically exempted by law.
Examples of fuel specifically exempted from sales and use tax include fuel used in a qualifying manner:
- agricultural
- industrial production
- certain taxable services or ambulance services
- certain fire trucks
- emergency rescue vehicles
- special fuels used in qualifying law enforcement vehicles operated by state and local governments
For more information, see Sales Tax Fact Sheet Petroleum Products #116, send an email to SalesUse.Tax@state.mn.us or call 651-296-6181 or 1-800-657-3777.
