Taxes on Boats in Minnesota

by Boat Alert / Last Updated: April 21, 2026 / Boat Buying

“I love boats and still remember the thrill of buying my first one in Minnesota” – Said Mike. But dealing with boat taxes is like sailing uncharted waters. In this piece, I’ll explain everything you need to know about taxes on boats in Minnesota — including sales tax rates, the difference between dealer and private party purchases, registration requirements, and what out-of-state buyers need to know.

Key Takeaways

• Minnesota’s base state sales tax on boats purchased from a dealer is 6.875%, but the actual rate varies by location — most buyers in the metro area pay 8.125% when local taxes are included
• Boat trailers purchased from a dealer are taxed at the same location-based rate (commonly 6.875% to 8.125%)
• Private party (individual-to-individual) boat sales are not subject to sales tax on the boat itself — only the trailer is taxed
• Sales tax exemptions are available for resale purchases and qualifying out-of-state buyers
• Residents of neighboring states like Wisconsin, South Dakota, Iowa, and North Dakota have specific tax rules to consider when buying boats in Minnesota
• Boat registrations in Minnesota are valid for three calendar years

Understanding Minnesota Boat Sales Tax

The Tax Rate Depends on Where You Buy

Minnesota does not have a single flat sales tax rate on boats. The state base rate is 6.875%, but most buyers will pay more once local city and county taxes are added. In much of the Twin Cities metro area, the combined rate comes to 8.125%. The exact rate depends on the location of the dealer or seller. You can look up the precise rate for any address using the Minnesota Department of Revenue’s Sales Tax Rate Calculator.

Dealer Sales vs. Private Party Sales

This is the most important distinction the article will make — and one that many buyers don’t know:

• Buying from a dealer: Sales tax applies to the full purchase price of the boat, motor, and trailer at the applicable local rate.
• Buying from a private individual: No sales tax is due on the boat or motor. Sales tax is only collected on the value of the trailer, since that is the portion operated on public roads. You will need an itemized bill of sale that separates the price of the boat/motor from the trailer.

Tax-Exempt Sales

Sales tax will not be collected if the buyer provides a valid sales tax exemption certificate, including a registered state sales tax identification number. This exemption is typically used by businesses purchasing inventory for resale. Exemption certificates from all U.S. states are accepted.

Out-of-State Buyers: General Rules

If you live outside Minnesota and purchase a boat from a Minnesota dealer, whether Minnesota sales tax applies depends on how you take delivery:

• Boat shipped out of state by a common carrier: Minnesota sales tax does not apply. The dealer will require a bill of lading before releasing the boat.
• Boat driven home from Minnesota: Minnesota sales tax applies at the time of purchase.
• Trailers and automobiles: Out-of-state buyers are generally not charged Minnesota sales tax on trailers when they show valid out-of-state identification. Taxes and registration fees on the trailer are the buyer’s responsibility in their home state.

Tax Requirements by State

Wisconsin Residents

Wisconsin residents who visit a Minnesota dealer in person and purchase a boat or pontoon must pay Minnesota’s sales tax. However, that amount is credited toward Wisconsin sales tax when you register the boat back home. Trailers purchased in Minnesota are not subject to Minnesota sales tax for Wisconsin residents — Wisconsin taxes and fees are paid at the time of trailer registration.

If you purchase a boat remotely (by mail, phone, or online) and have it shipped to Wisconsin by a common carrier, only Wisconsin’s sales tax applies.

South Dakota Residents

South Dakota residents purchasing a boat in person at a Minnesota dealer pay Minnesota’s sales tax at the time of purchase. This payment is then credited toward South Dakota’s sales and excise taxes when registering the boat. Because South Dakota’s 3% boat excise tax is lower than Minnesota’s rate, residents who paid the Minnesota rate will generally owe nothing additional upon registration in South Dakota.

If you purchase a boat remotely from Minnesota and have it shipped to South Dakota, only South Dakota’s taxes apply — including the 3% boat excise tax due at registration.

Iowa Residents

Iowa residents who buy a boat or pontoon in person from a Minnesota dealer pay Minnesota’s 8.125% (combined) sales tax at the time of purchase. Iowa will credit this payment when you register the boat, though the credit is capped at 6% of the purchase price.

Notably, Iowa residents are not charged sales tax on a trailer purchased alongside a boat or pontoon. If you purchase remotely and have the boat shipped to Iowa, only Iowa’s sales tax applies.

North Dakota Residents

North Dakota residents purchasing a boat in person from a Minnesota dealer pay Minnesota’s sales tax on the boat. Trailers and automobiles are not subject to Minnesota sales tax for North Dakota residents. Proof of the Minnesota tax payment must be provided when registering the boat in North Dakota.

Registering and Titling a Boat in Minnesota

New Boats

When registering a new boat for the first time, you will need to provide the length, manufacturer, hull material, type of propulsion, model, year, and hull identification number (HIN), along with a sales receipt showing that sales tax has been paid. For new boats longer than 16 feet, your dealer will typically apply for title and registration on your behalf.

Boat registrations in Minnesota are valid for three calendar years, ending December 31 of the final year.

Used Boats — Private Party Purchase

When buying a used boat from a private individual, here is what you need:

1. Title transfer: The seller signs the front of the Minnesota Watercraft Title; the buyer completes and signs the back. The transfer fee is $17.00. Boats over 16 feet are required to have a title in Minnesota.
2. Trailer registration: Sales tax is due on the value of the trailer only. An itemized bill of sale listing separate prices for the boat/motor and trailer will help ensure you are taxed correctly.
3. DNR registration update: Submit your documents at a local deputy registrar of motor vehicles office (the same place where you license your car) or by mail to the Minnesota DNR. A registration fee applies.

If the title lists any lien, you must provide a lien release from the lienholder before the transfer can be completed.

Lien Holder Information

If the boat you are buying has an outstanding lien, the DMV and DNR need documentation that the lien has been satisfied. This ensures clean transfer of title and protects you as the new owner.

Does Selling a Boat Count as Income?

Selling your boat may trigger a capital gains tax obligation depending on your financial situation — specifically, whether you sold it for more than you originally paid. This is relatively uncommon for recreational boats, which typically depreciate over time, but it is worth discussing with a tax professional if you sold at a profit.

Frequently Asked Questions about Boat Taxes in MN

Do I have to pay sales tax on a boat purchased in Minnesota? It depends. If you buy from a dealer, yes — sales tax applies at the local combined rate (commonly 8.125% in the metro area). If you buy from a private individual, no sales tax is due on the boat itself; only the trailer is taxed.

What is the sales tax rate on a boat in Minnesota? The state base rate is 6.875%, but local city and county taxes bring the combined rate to as high as 8.125% in many areas. Use the Minnesota Department of Revenue’s rate calculator to find the exact rate for your location.

Do I get credit for sales tax paid to another state? Yes. Minnesota allows credit for sales tax paid to another state, up to the total state and local tax due in Minnesota. Neighboring states like Wisconsin, Iowa, and South Dakota similarly offer credit for tax paid to Minnesota.

Do I have to pay sales tax on a used boat bought from a private seller in Minnesota? No — private party sales between individuals are not subject to sales tax on the boat or motor. You will pay sales tax only on the trailer’s value.

Where do I go to register a boat in Minnesota? Boat registration is handled through your local deputy registrar of motor vehicles office (where you license your car) or at the DNR License Center in St. Paul (500 Lafayette Road). Renewals can also be completed online.

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