Excise Tax

Motor fuels excise tax

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Tax base:

Fuels used in highway vehicles, aircraft, boats, snowmobiles, and all terrain vehicles.

Rates:

Highway fuels, gasoline and diesel              20/gal.
Compressed natural gas                          $1.739/thous. cu. ft.
Liquefied petroleum gas                         15/gal.
Liquefied natural gas                           12/gal.
E85 (ethanol blend)                             14.2/gal.
M85 (methanol blend)                            11.4/gal
Aviation fuels                                   5/gal.

Reduced by refund based on annual purchases:        Rate after refund
======================================================================
Up to 50,000 gallons                                    5.0/gal.
50,001-150,000 gallons                                  2.0/gal.
150,001-200,000 gallons                                 1.0/gal.
Over 200,000 gallons                                    0.5/gal.

Credits:

Taxes paid on fuel used for non-highway use, except for snowmobiles, boats, and all-terrain vehicles. Credit of 20 per gallon to distributors of fuel-grade alcohol blended with gasoline to produce gasohol (credit phased out from 10/1/97). The credit is 80 if the gasohol is sold to a governmental unit or for school transportation. Credit of 10/gal. of re-refined waste oil.

Exemptions:

Transit systems receiving state assistance.

Revenue Collections:

                              Highway Fuels                 Aviation Fuels
                             ==============================================
Fiscal Year 1993        	$466,722,000            	$2,833,000 
Fiscal Year 1994        	$484,445,000            	$2,666,000 
Fiscal Year 1995        	$501,090,000            	$3,138,000
Fiscal Year 1996        	$514,415,000            	$2,628,000
Fiscal Year 1997        	$532,048,000            	$3,169,000
Fiscal Year 1998        	$546,376,000            	$3,302,000
Fiscal Year 1999  		$576,685,000 	  		$3,338,000
Fiscal Year 2000        	$602,210,000 	  		$3,939,000

History:

Enacted in 1925 at 2/gal on highway fuel.

Alcoholic beverages tax

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Tax Base:

Distilled spirits, beer, malt beverages, wines, and premixed alcoholic beverages manufactured or received for sale in Minnesota.

Rates:

Beer:                           Tax per 31 gal. barrel
                               ========================
    3.2% or less                $2.40
    more than 3.2%               4.60


Distilled Spirits:              Per Liter   Per Gallon
                               ========================
                                $1.33           $5.03

Wine: (Alcohol by Volume)
    4% or less                  $0.08           $0.30
    > 14%-21%                    0.25            0.95
    > 21%-24%                    0.48            1.82
    > 24%                        0.93            3.52
    Sparkling wine               0.48            1.82

Cider:	
    0.5% to 7% 	 		 0.04	         0.15

Credit:

Small brewers receive a credit of $4.60 per barrel on the first 25,000 barrels produced each year for sale within Minnesota. To qualify, the brewer must have manufactured less than 100,000 barrels in the preceding year.

Exemptions:

Wine for sacramental purposes. Wine or beer made at home. Alcoholic beverages sold to food processors and pharmaceutical firms. Beer served on the premises of a brewery at no charge.

Special Provision:

Separate tax of 1 for each bottle or container of distilled spirits and wine 200 milliliters and larger. Tax is paid by the wholesaler at the time of removal from inventory for sale, delivery, or shipment.

Revenue Collections:

              Distilled Spirits   Beer              Wine
              ================================================
FY1993        $37,430,000         $14,614,000       $3,143,000
FY1994        $38,559,000         $14,409,000       $3,178,000
FY1995        $36,812,000         $14,792,000       $3,405,000
FY1996        $36,965,000         $14,834,000       $3,933,000
FY1997        $38,312,000         $14,784,000       $3,302,000
FY1998        $39,100,000         $15,004,000       $3,306,000
FY1999        $40,147,000         $15,298,000       $3,373,000
FY2000        $42,692,000         $15,713,000       $3,734,000

History:

Enacted in 1934 at rates of $1 per barrel of 3.2% beer and $2 per barrel of strong beer, 60/gal. of liquor, and rates for wine varying from 10 to 60/gal.

Cigarette tax

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Tax Base:

Cigarettes sold or used in Minnesota.

Rate:

48 per pack of 20 cigarettes.

Credits:

Distributors receive a 1% discount on the first $1,500,000 of stamps purchased and 0.6% on additional purchases. The discount covers tax compliance expenses.

Revenue Collections:

FY1993     $175,801,000
FY1994     $175,586,000
FY1995     $177,028,000
FY1996     $176,296,000
FY1997     $180,571,000
FY1998     $180,342,000
FY1999     $175,117,000
FY2000     $174,769,000

History:

Enacted in 1947 at 3 per pack.

Tobacco products tax

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Tax Base:

Tobacco products, other than cigarettes, sold or used in Minnesota, including cigars, smoking tobacco, and chewing tobacco.

Rate:

35% of wholesale price.

Credits:

Distributors allowed discount equal to 1.5% of tax for tax compliance expenses.

Revenue Collections:

FY1993      $8,423,000
FY1994      $9,456,000
FY1995     $10,205,000
FY1996     $11,296,000
FY1997     $13,278,000
FY1998     $13,798,000
FY1999     $14,147,000
FY2000     $15,390,000

History:

Enacted in 1955 at rate of 15% of wholesale price.

Controlled substances tax

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[Note: This tax was enacted as an additional tool for law enforcement to control the drug trade. Any controlled substance that is seized without the tax stamps can result in a substantial penalty that can have severe financial consequences for the person or persons found in possession. Receipts from this tax are due primarily to the curious or collectors of unusual stamps. However, since no attempt is made to connect purchasers of the tax stamps with illegal activity, some tax stamps may be purchased by dealers hoping to avoid the penalties if the substance is seized.]

Tax Base:

Marijuana or controlled substance, as defined, that is held, possessed, transported, transferred, sold, or offered to be sold in violation of Minnesota laws.

Rates:

Marijuana                $3.50 per gram or portion of a gram
Controlled substance    
   sold by weight        $200 per gram or portion of a gram
   not sold by weight    $400 on each ten dosage units, or portion thereof.

Exemption:

Pharmacists or other persons lawfully in possession of marijuana or a controlled substance.

Credit:

Tax paid to another state or local government.

Revenue Collections:

FY1993          $206,000
FY1994          $202,000
FY1995          $233,000
FY1996          $135,000
FY1997          $112,000
FY1998          $106,000
FY1999           $81,000
FY2000           $50,000

History:

Enacted in 1986.

Mortgage registry tax

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Tax Base:

Principal debt which is secured by a mortgage of real property in the state.

Rate:

23 per $100 of principal debt.

Exemptions:

Organizations exempt from the property tax.

Revenue Collections:

(State portion*)

FY1993  $48,048,000
FY1994  $63,335,000
FY1995  $34,224,000
FY1996  $46,831,000
FY1997  $48,515,000
FY1998  $67,641,000
FY1999  $89,791,000
FY2000  $72,937,000

* 3% goes to county treasurer in which the mortgaged property is situated.

History:

Enacted in 1907 at 50 per $100 of principal debt.

Deed transfer tax

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Tax Base:

Transfer of real estate by any deed, instrument, or writing.

Rates:

$1.65 for consideration of $500 or less plus $1.65 for each additional $500.

Major Exemptions:

Executory contracts for the sale of land; mortgages; wills; plats; leases; cemetery lot deeds; deeds of distribution by personal representatives; and transfers between co-owners.

Revenue Collections:

(State Portion*)

FY1993  $32,680,000
FY1994  $38,817,000
FY1995  $36,723,000
FY1996  $41,154,000
FY1997  $46,246,000
FY1998  $52,566,000
FY1999  $62,945,000
FY2000  $68,649,000

* 3% goes to county treasurer in which the mortgaged property is situated.

History:

Enacted in 1961 at $1.10 for first $1,000 of consideration and 55 for each additional $500.

This information was taken from the Minnesota Department of Revenue Tax Research Division's "Tax Handbook", 1994 edition, April 1995, an update for 1995, and the 1996 edition.

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