How are license tab fees calculated in Minnesota?
MINNEAPOLIS — It's a yearly expense that Minnesota drivers often aren't too fond of paying. Bill from Otsego wanted to know: How do they calculate license tab fees? Good Question.
The variance on license tab fees is as wide as the interstates that drivers cruise with several factors at play.
"Depending on how much the vehicle was worth when it was purchased, it can be a pretty substantial sum," said Greg Loper, vehicle services program director for Driver and Vehicle Services.
What are the fees people pay that are universal?
"There is a filing fee that you pay that's $8," said Loper.
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Next up is a $1 office fee if you renew your tabs in the office. Lastly, there's a $2.25 technology surcharge. As it's named, Loper said it helps them update their technology at DVS.
How does where you live impact the tab fee?
"What's important about that is that's something we put in the hands of your county," said Loper.
It's called a wheelage tax, money meant for that specific county's road repairs. It's not required for counties to have a wheelage tax. If they decide to have one, the tax can be $10, $15 or $20. Hennepin, Ramsey, Washington and Carver Counties all charge $20. Dakota and Scott Counties charge $10. Anoka County doesn't have a wheelage tax.
"I've talked to friends and they've said, 'Why do I have a wheelage tax on one vehicle that I own and not on another?' And we get to talking about that and we realize that one of the vehicles they keep at their cabin and there's not a wheelage tax there," said Loper.
The real cost of license tabs is paying a percentage of the car's value.
"It's going to be how much was the car valued when it was new, the manufacturer's suggested retail price (MSRP) and the age of the vehicle. Those are the two key variables," he said.
The percentage you pay, set by the state legislature, is 1.575%.
In year one, the cost is based on 100% of the car's MSRP. Let's say you bought a new car for $30,000. That means the fee would be $472.50 in addition to the fees mentioned earlier. As the car gets old, the valuation goes down anywhere from 5-15% each year for the next ten years. In year 10, it's 10% of the car's valuation. For the example equation listed, that means the fee would be $47.25.
"Once you get to be an 11-year-old vehicle or older, it's only $20," said Loper.
When Jesse Ventura was Minnesota's governor, license tab fees were a flat $189 for a new car, then $89 in the following years. It was a popular initiative that stopped in 2008 as the state legislature tried to find new revenue to improve roads.
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"If you have a vehicle and you go, 'Wow, this seems high'…You can contact us, and we're more than happy to look at any vehicle's value to make sure that we got it right," said Loper.
Heavier vehicles, like certain trucks, have higher fees. If it weighs more than 10,000 pounds, the minimum is $120.
To learn more about the state statute that determines tab fees, click here.