Tire fees and studded tire fees

What are these fees?

The tire fee is a fee collected by the seller on the retail sale of every new vehicle tire sold.

The studded tire fee is a fee collected by the seller on the retail sale of every new studded tire sold.

What are the amounts of these fees?

Tire sellers must collect:

• A $1 fee on each new vehicle tire sold before Jan. 1, 2026.
• A $5 fee on each new vehicle tire sold on or after Jan. 1, 2026.
• A $5 fee on each new tire sold that contains studs.

For studded tires, sellers must collect both the studded tire fee and the fee for new vehicle tires. This means effective Jan. 1, 2026, sellers will collect $10 in fees on each retail sale of a tire that contains studs.

Are there exemptions for these fees?

Yes. Sellers do not have to collect the tire fee on any of the following:

• Sales of tires to the federal government.
• Sales of tires to Indians delivered to the enrolled member's Indian Country.
• Sales of re-treaded vehicle tires.
• Tires provided free of charge under the terms of a recall or a warranty service.

If a tire is returned, are the fees refunded?

Yes. If a customer returns a tire and is refunded the entire selling price, the tire fees are refundable as well.

Can the seller keep a percentage of the tire fees?

Yes. The seller may keep:

• $.10 for each tire sold before Jan. 1, 2026.
• $.25 for each tire sold on or after Jan. 1, 2026.

For studded tires, the seller may keep $.50 of the studded tire fee.

The remaining tire fees must be paid to the department.

Are the fees subject to retail sales tax?

No. Tire fees are not subject to retail sales tax.

How do sellers report the fees to the department?

Sellers must report the number of new vehicle tires sold, under the Tire Fee classification in the “Other Taxes” section. Studded tires sold will be reported under the Studded Tire Fee classification.

The amount paid to the department is calculated by multiplying the number of tires sold by the rate.

Example (before Jan. 1, 2026): 23 new tires sold x $.90 = $20.70; 23 studded tires sold x $4.50 = $103.50

Example (on or after Jan. 1, 2026): 23 new tires sold x $4.75 = $109.25; 23 studded tires sold x $4.50 = $103.50

Are the portion of the fees kept by the seller taxable?

Yes. A seller must pay Service and Other Activities business and occupation (B&O) tax on the portion of the fees they keep.

What happens if the fees are not collected from the seller?

Sellers, who fail to collect these fees or pay the fees to the department, even if the failure is the result of a circumstance beyond their control, are personally liable for the amount of the fee.

Sellers who fail or refuse to collect these fees with the intent to gain an advantage or benefit are guilty of a misdemeanor.