Price jump for used cars results in boost in Minnesota sales tax collected

·4 min read

The microchip shortage responsible for bottlenecking the production of new cars has been a boon for the used car market.

However, the lack of available new vehicles also has created a greater demand and thus a scarcity of quality used vehicles.

This has driven up the cost of used cars and trucks, which has also increased the sales tax collected on used vehicle transactions.

According to an iSeeCars.com analysis of 1.2 million used car sales nationwide, the price of used cars in Minnesota has increased 12.4% year over year, ranking the state as the sixth-lowest price increase for used vehicles in the nation.

That translates to an average additional $2,945 per used vehicle sold in the state.

It also translates into a significant revenue boost to the Minnesota Treasury. The state currently charges a 6.5% sales tax on the sale of used cars. This translates to an average $191.42 in additional tax collected per used vehicle sold in the state.

The national average increase in used car sales prices is 16.8% or $3,926 per vehicle sold.

According to iSeeCars:

  • Consumers may be able to get a better used car deal by crossing state lines.

  • Rhode Island is the state with the greatest used car price increase in 2021 compared to 2020 at 25.55, which amounts to $5,559.

  • Another New England state, Vermont, has the smallest used car price increase at 10.7%, which amounts to $2,717.

  • Of the top 10 states with the lowest price increases, five are Eastern states and four are in the Midwest.

  • Of the 10 states with the highest price increases, six are Western states, and four are Eastern.

According to data provided by the National Automotive Dealers Association, average year-to-date used-car sales per new- and used-car dealership in the United States was $5,884,668 in March, the last month for which data is available. In March 2020, the year-to-date used car sales per new- and used-car dealership was $4,461,184.

Used Car Price Increases by State

Rank

State

Year-Over-Year % Price Change

Year-Over-Year $ Price Change

1

Vermont

10.7%

$2,717

2

New Jersey

11.1%

$2,580

3

West Virginia

11.8%

$2,910

4

Nebraska

12.1%

$2,968

5

Wisconsin

12.3%

$3,026

6

Minnesota

12.4%

$2,945

7

Iowa

12.7%

$3,135

8

Hawaii

13.3%

$3,391

9

New York

13.7%

$3,126

10

New Hampshire

13.8%

$3,106

11

Massachusetts

14.1%

$3,188

12

Indiana

14.1%

$3,247

13

Connecticut

14.2%

$3,000

14

Pennsylvania

14.3%

$3,214

15

New Mexico

14.4%

$3,444

16

Colorado

14.6%

$3,554

17

North Dakota

14.9%

$4,062

18

Illinois

14.9%

$3,575

19

Idaho

15.0%

$4,067

20

Oklahoma

15.9%

$3,895

21

Texas

16.0%

$3,890

22

Mississippi

16.1%

$3,892

23

Louisiana

16.6%

$3,883

24

North Carolina

16.7%

$3,882

25

Kansas

16.8%

$3,950

26

Maine

16.8%

$3,977

National Average

16.8%

$3,926

27

Delaware

17.3%

$3,652

28

Virginia

17.3%

$3,883

29

Michigan

17.7%

$4,051

30

South Dakota

18.1%

$4,998

31

Kentucky

18.3%

$4,196

32

Missouri

18.4%

$4,338

33

South Carolina

18.5%

$4,283

34

Alabama

18.5%

$4,304

35

California

18.7%

$4,296

36

Maryland

19.1%

$4,142

37

Florida

19.2%

$4,224

38

Ohio

19.2%

$4,102

39

Alaska

19.3%

$5,907

40

Washington

19.4%

$4,664

41

Tennessee

19.4%

$4,539

42

Wyoming

19.6%

$6,173

43

Oregon

20.2%

$4,738

44

Arkansas

20.4%

$4,994

45

Arizona

20.5%

$4,600

46

Utah

21.0%

$4,729

47

Montana

21.8%

$5,926

48

Georgia

22.2%

$5,100

49

Nevada

22.3%

$4,852

50

Rhode Island

25.5%

$5,559

Washington Examiner Videos

Tags: States, News, Prices, Minnesota, Cars, Taxes

Original Author: Bruce Walker, The Center Square

Original Location: Price jump for used cars results in boost in Minnesota sales tax collected

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