Price jump for used cars results in boost in Minnesota sales tax collected
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.
This article was originally posted on Price jump for used cars results in boost in Minnesota sales tax collected