Senate DFLers maintained key investments and policy victories in transportation and transit while helping to make adjustments to balance the state budget. The 2025 transportation bill seeks to balance cuts equally across regions of the state and varying modes of transportation.
Key Provisions:
Auto Parts Sales Tax Dedication Changes
The final transportation bill makes changes to the Auto Parts Sales Tax (APST) to increase general fund resources (and lower Highway User Tax Distribution Fund resources) by $94.798 million in FYs 26-29, and by an average of $30 million per year from FY 2030-2035. Senate DFLers ensured that the APST will still reach full dedication to transportation sources, but in FY 2037, rather than in FY 2033.
APST revenue is divided between the General Fund, the Highway User Tax Distribution Fund, and the Transportation Advancement Account (TAA), which provides flexible transportation aid to municipalities, and is especially important for small communities that do not receive other forms of state transportation aid. The TAA is held harmless by the changes to the APST in the agreement.
EV Surcharge Changes
The transportation bill will increase the electric vehicle surcharge and add a new surcharge for plug-in hybrid vehicles. Unlike current law the surcharge will not be a flat fee but will be a progressive amount based on the value of the vehicle that is being registered, similar to how tab fees are calculated where newer and more expensive vehicles see higher fees.
Under the agreement, the lowest surcharge for an EV would be $150, and the lowest for a plug-in hybrid would be $75. A $50,000 new EV would have a surcharge of $250. Please request any calculations for sample surcharges based on the value and age of a given vehicle.
Kilowatt Per Hour Tax
HF 14 will also implement a 5-cent per kilowatt hour tax at public charging stations beginning on July 1st, 2027. A working group is also established to consider items including implementing taxes on electric motor vehicle fuels and how to transition from the EV/ PHEV surcharge (which are meant to serve as a proxy for gas taxes not paid) and taxing electricity when used as vehicle fuel.
In recognition that a tax like a kilowatt per hour tax should be a long-term replacement for and not a supplement to an EV surcharge, the minimum surcharge amount for an EV will decrease from $150 to $100 and the minimum PHEV surcharge will decrease from $75 and $50 when the kilowatt per hour tax is scheduled to be implemented.
Limited modifications to Minnesota’s lane filtering/ lane splitting laws
Introduces restrictions on the areas where lane filtering is allowable to exclude construction work zones, school zones, roundabouts, and metered freeway ramps is included. Lane filtering refers to the practice of motorcycles passing stationary vehicles between vehicle lanes or on a shoulder. Lane splitting is functionally the same, except it refers to passing slow moving vehicles rather than passing stationary vehicles.
Modifications to the reintegration driver’s license
The “reintegration” driver’s license is a temporary license to provide access to Minnesotan’s leaving incarceration. HF 14 contains provisions to adjust requirements around the reintegration license to make it easier for Minnesotans leaving incarceration to successfully transition back into their communities and transition between the reintegration license and a standard driver’s license.
Free access to Metro Transit rides for Metro Mobility users
The transportation bill will allow metro mobility users to access “regular route” metro transit rides for no fare. This is meant to both improve access, affordability, and travel options for Minnesotans with a disability, and can also relieve some pressure and costs for the metro mobility network.
No-Fee Reimbursements
The Transportation bill authorizes “no-fee” reimbursements for Deputy Registrars and Driver’s License Agents for transactions where they perform work but did not receive payment under the existing fee structure. This step is meant to help stabilize availability of local customer service for Minnesotans when they need it to access or renew a driver’s license, register a vehicle, and any other DVS operation.
Designates the Minnesota Senate Majority Leader Kari Dziedzic Memorial Bridge
HF 14 includes a provision to designate the historic 10th Avenue Bridge over the Mississippi River in Minneapolis as the Minnesota Senate Majority Leader Kari Dziedzic Memorial Bridge.
Modifications to the Electric Bike Rebate Program
Following challenges with the first round of the electric bike rebate under a first come, first serve system, HF 14 converts the rebate to a lottery system and introduces eligibility requirements for individuals to either meet an income threshold or be a person with a disability.
Did Not Pass:
- Changes to the definition of “highway purposes” that would allow dedicated highway funding tobe spent for a broader range of purposes, including transit projects within a highway right-of-way.
- Modifications to the metro area sales tax for transportation that would reduce direct funding tocounties and expand resources for Bus Rapid Transit build out.
GOP Provisions Blocked
House Republicans sought to reverse key policy and funding achievements in the Transportation area from2023. Protecting those wins was a key DFL achievement in 2025. Items that were protected include:
Greenhouse Gas Mitigation Law: the House transportation bill entering conference included a provision to delay the policy requirement that road authorities take steps to mitigate the increase of carbon emissions associated with major highway projects. This delay was not included in the final transportation bill. The transportation sector remains Minnesota’s largest source of GHGs, accounting for about 29% of the state’s emissions, and the “GHG” law is at the forefront of reducing carbon emissions and combatting climate change in the Transportation sector in Minnesota.
Cuts to Dedicated Transportation Revenue: In 2023, Senate DFLers led the way to increasing dedicated transportation revenues to prevent projected decreases in gas tax revenue, continue to invest in and maintain our road system, and to make new investments in transit and active transportation systems across the state. House Republicans declared these cuts a top priority by making HF 5 a key priority coming in to session. Senate DFLers successfully blocked these changes to maintain ongoing funding for active transportation, maintain funding for metro transit, and maintain the retail delivery fee.