Transportation Tax Increases
The Transportation Omnibus Bill contained a whopping $3.8 billion in tax increases! Here are some of the new transportation-related expenses you can expect to face:
Vehicle Registration Tax/Tabs:
This tax hike averages to be a 36% increase over the first 11 years of your new vehicle. The change will apply to taxes payable for a registration period starting on or after January 1, 2024.
Filing Fee increases:
Filing fees will increase to $8 on every vehicle registration renewal, excluding pro rate transactions. This section is effective October 1, 2023.
50 Cent Delivery Fee on retail deliveries over $100:
Over $189 million over four years is expected to be leveled on residents who shop from home thanks to this tax. The fee will be implemented on deliveries over $100. Exemptions include deliveries for groceries, prepared food, baby products, and feminine hygiene products. The tax would begin on July 1, 2024, and is the largest delivery tax in the U.S.
Businesses who have reached out to me are unsure how they will implement this tax and families are uncertain when it will be charged. If you order groceries but also have a taxable item in the mix, does the whole order get taxed? Do you have to make one order for taxable items and one for non-taxable items to avoid the tax? Businesses currently don’t have the capacity to decide if each individual item is subject to the delivery fee and we expect a lot of confusion for businesses and customers as this is rolled out.
Despite advocates insistence that this tax will reduce deliveries, greenhouse gases, and wear and tear on roads, it will likely INCREASE the number of smaller orders placed as consumers try to avoid the fee. Instead of one large order from a retailer that includes groceries and cleaning products and beauty products, consumers are now likely to place two or three orders under $100 to avoid the fee.
$6 Fee Increase for Driver licenses:
This is effective July 1, 2023, and applies to applications made on or after that date.
Gas Tax Automatic Increases for Inflation:
The expected gas tax hike beginning January 1, 2024 is 5 cents/gallon over four years. Drivers will pay an additional $423 million over four years, which will hurt family budgets.
Metro Area Sales Tax Increase:
This 0.75% increase in the 7-county Metro Sales Tax will be used to fund increased spending on transportation projects. The bulk of the money, 83%, will go toward Metro Transit funding, and it is widely expected that much of this money will be used to pay for the enormous cost overruns on SW Light Rail project. These funds cannot be used on Southwest Light Rail for at least a year, however, until a new Commission has finished developing a plan to change how the Met Council operates.
The remaining 17% will be sent to Metro Counties for local road projects. This section is effective for all sales and purchases made on or after October 1, 2023, and applies in the counties of Anoka, Carver, Dakota, Hennepin, Ramsey, Scott, and Washington.
An additional .25% increase in the Metro Sales tax will go to pay for rental housing programs in the same counties. This combined 1% increase in the Metro Sales Tax will make everyday purchases more expensive for families throughout the Metro.
Increase in Motor Vehicle Sales Tax from 6.5% to 6.875%:
Will give Minnesota the 5th highest Vehicle sales tax rate in the U.S. This section is effective for sales and purchases made on or after July 1, 2023.
If you are thinking about buying a new or used car, do it before July 1st to avoid the new sales tax increase. It is incredibly frustrating to see Minnesotans saddled with these tax increases to fund a 38% increase in the state budget when we had a historic surplus. Government needs to be good stewards of your tax dollars, not waste them on unsustainable spending.
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