The fee you pay to register your vehicles in Minnesota is set to drop next year, but just how much will the average car owner save?

A one-time $254 million reduction for vehicle tab fees in 2027 — part of a deal Minnesota lawmakers struck at the end of the legislative session — will revert overall rates to pre-2024 levels.

Minnesota collected more than $1 billion in personal vehicle registration fees in 2025, up from $764 million in 2023. The 33% increase over two years came after Democrats in control of state government increased tax rates and reduced the depreciation rate for vehicles.

Republicans, who pushed for the temporary relief in closed-door negotiations with Democratic-Farmer-Labor leaders, claimed the fee reduction as one of their biggest wins this year.

DFLers, meanwhile, say they don’t want a permanent cut as they raised rates to help fund ever-more-expensive repairs to the state’s extensive highway system, which is the fourth most extensive of any state by lane miles, tailing only Illinois, Texas and California.

“As of now, it’s a one-year reprieve,” said state Sen. John Jasinski, R- Faribault, at a news conference late in this year’s legislative session.

How registration rates work

The cut will temporarily revert tab fees to pre-2024 levels, though individual savings will depend on a vehicle’s value and age. Here’s how rates work:

Under the changes DFLers passed in 2023, the standard tax rate went from 1.25% to 1.54% of value for a vehicle registered before Nov. 16, 2020.

Vehicles registered in Minnesota on or after that date saw rates rise from 1.285% to 1.575%.

A new $50,000 vehicle in 2026 — the average amount someone paid for a new vehicle this year, according to Kelley Blue Book — would carry a base tax rate of $787.50.

Taxes from tabs go to the state Highway User Tax Distribution Fund, which finances Minnesota’s highway system.

Other fees

Then there are a few other fees charged by Minnesota Driver and Vehicle Services, including an $8 filling fee and a $2.25 “technology fee” to support operations. License plates themselves, if needed, go for $15 a pair.

Some counties also charge a “wheelage tax” on some vehicles. In the metro, Ramsey, Washington, Hennepin and Carver counties charge $20. Dakota and Scott counties charge $10. Anoka County doesn’t have a wheelage tax.

Other fees apply depending on the payment method, such as for credit card use.

What new rates will be

When the break on tab fees starts in 2027, the base tax rate on a new $50,000 personal vehicle will drop to $642.50 — saving the owner about $145 in taxes. DVS determines the overall value of the vehicle using the vehicle database Polk VINtelligence, or consulting a car dealer in the rare case a vehicle is not listed.

The math becomes slightly more complicated in the following years as vehicles begin to drop in value according to a state-set schedule.

The same vehicle that cost $50,000 in 2026 would be taxed on 95% of its value in 2027.

That wasn’t the case until 2024, when DFL-created changes to the depreciation schedule went into effect. Under the previous scheme, the taxable value of cars dropped 10% each year. Under changes DFLers approved in 2023, the taxable value now drops 5% in the first year.

Value continues to drop in 10% increments each year. At nine years, the taxable value is 25%. That drops to 10% in year 10, and then to a base registration rate of $20 in year 11 that lasts the rest of the vehicle’s life.

Vehicle Services Program Director Greg Loper said his office is working to implement the 2027 tab fee decrease, as some vehicle owners pay for their registrations well in advance.

“We want to be prepared for that, because if you pay too much, we’re going to issue you a refund,” he said. “We don’t want to spend any more of the state’s money on administration than we have to.”

Will the changes stick?

GOP lawmakers said they were disappointed that their DFL colleagues wouldn’t support their proposal to revert to the previous depreciation schedule, but that they’d continue to push for it in the next session. They argue that vehicles depreciate considerably more than 10% in their first two years on the road.

DFLers oppose changing the schedule and extending the overall cuts because, they say, the state needs to raise more money for its road network, which is expensive to maintain due to its size and the state’s climate.

“You get what you pay for,” House DFL Leader Zack Stephenson of Coon Rapids told reporters after the Legislature concluded business on May 18. “The cost it takes to keep a highway in working order is not something that we can dramatically decrease by fiat.”

Wisconsin has a similar setup: a base rate of $85 per personal vehicle. Minnesota has some of the highest registration costs early on, but over time, they drop to among the lowest, according to Loper.

Ventura cut tab fees

Minnesota didn’t always have such high tab fees based on the value and age of the vehicle. In 1999, Gov. Jesse Ventura, an independent, signed legislation that went into effect in 2000 whereby vehicle owners paid $189 the first two years and $99 in subsequent years.

The Legislature ended the flat-rate system in 2008 as part of a push to fund transportation infrastructure in the wake of the 2007 Interstate 35W bridge collapse in Minneapolis.

Loper said many states are facing difficulties raising money for transportation and anticipate diminishing revenue from taxes on gas as efficiency continues to improve and as electric vehicles become more common.

He acknowledged, however, that lawmakers might have to look at other ways to raise revenue besides raising registration fees.

“When the Legislature determined that we were going to have some challenges and we needed to raise revenue for infrastructure, they made this increase,” he said. “There’s been a fairly vocal resistance to that. I think the Legislature heard people and is taking this as a sign that maybe we need to look at how we do road infrastructure.”