Alternative Fuel Tax

The Minnesota Department of Revenue imposes an excise tax on the first licensed distributor that receives E85 fuel products in the state and on distributors, special fuel dealers, or bulk purchasers of other alternative fuels. The Minnesota Department of Revenue Commissioner must determine the tax rate for alternative fuel sales annually. The tax rate for E85 is set by the Minnesota Highway Construction Cost Index. Propane is taxed at a minimum rate of $0.1875 per gallon, liquefied natural gas is taxed at a minimum rate of $0.15 per gallon, and compressed natural gas is taxed at a minimum rate of $1.974 per thousand cubic feet. Exemptions apply for certain categories of fuel purchasers.

(Reference Minnesota Statutes 296A.07 and 296A.08)