Minnesota lawmakers approve temporary cut to license tab fees for 2027

MN license tab cost dropping to 2022 rate

License tab fees in Minnesota are dropping back down to their 2022 rate. FOX 9's Karen Scullin has the details. 

ST. PAUL, Minn. (FOX 9) - A new deal at the State Capitol means Minnesota drivers will see a break on license tab fees, but only for a limited time.

Lawmakers approve temporary tab fee cut for 2027

What we know:

Minnesota legislators agreed to lower the license tab fee rate for one year, starting in 2027. The rate will drop from 1.575%, which started in 2023, back to the 2022 rate of 1.285%. This change is expected to save Minnesotans a total of $254 million.

Sen. John Jasinski, a Republican from Faribault, said, "Minnesota has the highest license tab fees in the nation for new cars. So that was one of the big things that hit me."

He added, "You know, that's something, it touches everybody. Actually, just today, hearing it in the hallways, I'm hearing it from everybody, is very excited about the bill. Even Democrat legislators, former legislators and existing legislators, hey, thanks for getting that done. We know you were working on that."

For a $40,000 vehicle, the first year of ownership would cost $630 under the old rate and $514 under the new rate, saving about $116. If the car is two years old, the savings would be $110, and for a three-year-old car, $104. The older the car, the less the savings.

Using the current Minnesota depreciation schedule (100%, 95%, 90%, 80%, etc.) and comparing:

• Old rate: 1.575% of MSRP
• New proposed rate: 1.285% of MSRP
• On a $40,000 vehicle, here’s the difference year-by-year.

Car owners react to the change

What they're saying:

Many drivers are welcoming the news.

Lori Pettit, a car owner, said, "I think it’s awesome. It is awesome. I mean we pay enough in property tax, and everything else so with gas going up a little help anywhere is good."

Molly Resch, another car owner, said, "I would love that, I think the last time I got mine done they were three or four hundred dollars so I would love it."

The money to cover the fee reduction is coming from the general fund, and nothing is being cut to pay for it.

Lawmakers hope for a longer-term solution

What's next:

The savings is only set for one year, but there is hope it could extend beyond that. 

Jasinski said, "We want to work on that next year, there's no doubt. It was just a matter of money, what was available for us to give back to taxpayers. So we'll look at that next and we can look at other methods, it was frustrating."

Many Minnesotans are eager to see if the break will last longer than just one year.

What we don’t know: It is not yet clear if lawmakers will find a way to make the lower tab fee rate permanent or extend it beyond 2027.