Propane Laws and Incentives in Minnesota
The list below contains summaries of all Minnesota laws and incentives related to propane.
Laws and Regulations
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)
State Agency Sustainability Plan and Requirements
Each state department or agency must prepare a biennial sustainability plan, that includes ways to modify vehicle use practices, and report annually on progress towards implementing their plan. Each state agency plan must prioritize the purchase of on-road vehicles that use alternative fuels. Vehicle purchasing priority is as follows:
1. Electric vehicles
2. Hybrid electric vehicles
3. Vehicles that use alternative fuels, including biodiesel blends of 20% (B20) or greater, compressed or liquefied natural gas, ethanol blends of 70% (E70) or greater, hydrogen, or propane
4. Gasoline or diesel vehicles
High priority vehicle types may be rejected if the vehicle type is incapable of carrying out its purpose or the total cost of ownership is more than 10% higher than the next vehicle in the preference list. Emergency and law enforcement vehicles are exempt from this requirement. State agency plans must also, among other things, encourage state employees to fuel vehicles with alternative fuels when available and increase the use of renewable fuels derived from agricultural products or waste products.
(Reference Minnesota Statutes 16C.135 and 16C.137)
State Incentives
Off-Road Diesel Replacement Grants
The Minnesota Pollution Control Agency (MPCA) provides funding to public, private, and nonprofit fleet owners for the replacement of eligible off-road diesel equipment. Eligible equipment includes trailer refrigeration units, terminal tractors/drayage trucks, and more. This program is partially funded by Minnesota’s portion of the Volkswagen Environmental Mitigation Trust. For more information, including funding availability, see the MPCA Diesel Emission Reduction Act website.
More Laws and Incentives
To find laws and incentives for other alternative fuels and advanced vehicles, search all laws and incentives.