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Bill to lower motor vehicle taxes passes legislature
A bill to permanently lower motor vehicle taxes for Kentuckians was sent to Gov. Andy Beshear Monday, who is expected to sign the bill into law.
The measure, HB 6, which had 50 sponsors including 82nd Rep. Regina Huff (R-Williamsburg), would ensure Property Value Administrators (PVAs) under the Kentucky Department of Revenue only use the average trade-in value, not the clean trade-in value, as the standard when assessing the value of motor vehicles for tax purposes.
“We’ve reached the final step in providing relief to Kentucky taxpayers who have been overpaying on their vehicle taxes for over a decade,” said 60th Rep. Sal Santoro (R-Union), who was one of the primary sponsors of the bill. “This has been a top priority issue this session, and I want to thank my colleagues for supporting this bill and getting it to the finish line.”
The legislation came about following a memorandum issued by the Office of Property Valuation detailing a 40 percent increase on motor vehicle taxes in 2022 compared to last year. These taxes are set using a standardized measure required by Kentucky law, the “average trade-in value.” However, since 2009 the Department of Revenue has defined “average trade-in” to mean a higher valuation of “clean trade-in.”
“I want to emphasize that this bill in no way changes what is already written in statute. The standard outlined by law has always been and will continue to be the average trade-in value,” Santoro added. “This bill simply adds in language that will prevent the Department of Revenue from playing by their own rules and assessing vehicles for more than they’re worth.”
Beginning with 2023 vehicle assessments, the bill would clarify that PVAs are required to use the average trade-in value, not the clean trade-in value, when assessing vehicles, unless proper documentation is provided that proves a vehicle falls outside of that standard. For 2022, the bill would have taxpayers pay the amount for 2021, with refunds being issued within 90 days to those who have already overpaid this year.
Primary co-sponsor Representative Patrick Flannery saw a need for the measure early on.
“To say this correction is overdue would be an understatement, but with the 40 percent increase this year, these practices by the Department of Revenue couldn’t fly under the radar any longer. We’re looking at more than a decade of over-taxation on the part of the Department, and it’s time for us to correct it on behalf of all Kentucky taxpayers.”
The bill received unanimous support in both chambers. The Kentucky Senate approved the bill 95-0 on Feb. 3, and the Kentucky House approved the bill with a 91-0 vote on March 4.
House Speaker David W. Osborne signed the bill on Friday and Senate President Robert Stivers signed the bill Monday and had it delivered to the governor.
