SF 1747

Introduction - 94th Legislature (2025 - 2026)

Posted on 02/21/2025 10:53 a.m.

A bill for an act
relating to transportation; taxes; repealing indexed increases to the motor fuels
tax; amending Minnesota Statutes 2024, sections 296A.07, subdivision 3; 296A.08,
subdivision 2.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

Minnesota Statutes 2024, section 296A.07, subdivision 3, is amended to read:

Subd. 3.

Rate of tax.

deleted text begin (a) Subject to paragraph (b), deleted text end The gasoline excise tax is imposed
at the following rates:

(1) E85 is taxed at the rate of 17.75 cents per gallon;

(2) M85 is taxed at the rate of 14.25 cents per gallon; and

(3) all other gasoline is taxed at the rate of 25 cents per gallon.

deleted text begin (b) Annually on August 1, the commissioner must determine the tax rate applicable to
the sale of E85, M85, and all other gasoline subject to tax under this section for the upcoming
12-month period beginning on January 1. The adjusted rate must equal the current rate,
multiplied by one plus the percentage increase, if any, in the Minnesota Highway
Construction Cost Index for the reference year. The tax rate must be rounded to the nearest
tenth of a cent. Each of the tax rates for E85, M85, and all other gasoline must not be lower
than the respective rates specified in paragraph (a). Beginning with the calculation on August
1, 2025, the percentage change in each of the tax rates for E85, M85, and all other gasoline
as a result of the requirements under this paragraph must not exceed three percent.
deleted text end

deleted text begin (c) For purposes of this subdivision:
deleted text end

deleted text begin (1) the Minnesota Highway Construction Cost Index is as determined by the
commissioner of transportation; and
deleted text end

deleted text begin (2) "reference year" means the 12-month period ending on June 30 two years prior to
the year in which the calculation is made.
deleted text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 2.

Minnesota Statutes 2024, section 296A.08, subdivision 2, is amended to read:

Subd. 2.

Rate of tax.

(a) deleted text begin Subject to paragraph (b), deleted text end The special fuel excise tax is imposed
at the following rates:

(1) liquefied petroleum gas or propane is taxed at the rate of 18.75 cents per gallon;

(2) liquefied natural gas is taxed at the rate of 15 cents per gallon;

(3) compressed natural gas is taxed at the rate of $1.974 per thousand cubic feet or 25
cents per gasoline equivalent; and

(4) all other special fuel is taxed at the same rate as the gasoline excise tax as specified
in section 296A.07, subdivision 2.

deleted text begin (b) Annually on August 1, the commissioner must determine the tax rate applicable to
the sale of E85, M85, and all other gasoline subject to tax under this section for the upcoming
12-month period beginning on January 1. The rate must be adjusted as provided in section
296A.07, subdivision 3, paragraph (b). The tax rate must be rounded to the nearest tenth of
a cent. Each of the tax rates for liquefied natural gas or propane, liquefied natural gas,
compressed natural gas, and all other special fuel must not be lower than the respective
rates specified in paragraph (a).
deleted text end

deleted text begin (c) deleted text end new text begin (b) new text end The tax is payable in the form and manner prescribed by the commissioner.

deleted text begin (d) deleted text end new text begin (c) new text end For purposes of this subdivision, "gasoline equivalent," as defined by the National
Conference on Weights and Measures, is 5.66 pounds of natural gas or 126.67 cubic feet.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end

Sec. 3. new text begin GENERAL FUND TRANSFERS.
new text end

new text begin (a) By July 31, 2025, the commissioner of management and budget must consult with
the commissioner of transportation to determine the revenue reduction resulting from this
act to the highway user tax distribution fund. The determination must be made for each of
fiscal years 2026 and 2027 based on the most recent revenue estimates.
new text end

new text begin (b) By July 31, 2025, the commissioner of management and budget must transfer the
amount as determined in paragraph (a) for fiscal year 2026 from the general fund to the
highway user tax distribution fund.
new text end

new text begin (c) By July 31, 2026, the commissioner of management and budget must transfer the
amount as determined in paragraph (a) for fiscal year 2027 from the general fund to the
highway user tax distribution fund.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2025.
new text end