As supply chain issues cause the cost of new and used vehicles to rise, the value of the car you own is also going up. That means most Kentuckians will be paying more when it comes time to renew their vehicle registration.
According to a letter from the state’s Office of Property Valuation sent out to clerk’s offices this week, the value of vehicles this year, compared to last year, is up about 40%, which will increase the cost you pay for your registration.
According to Kentucky’s Division of State Valuation, the average car value for a vehicle in Kentucky increases 3 to 4% each year. Last year, the average value was up 11%.
The letter states supply-and-demand issues for new and used cars, and higher selling prices are driving up the value of vehicles.
The new assessments, “reflect the unprecedented rising value of most motor vehicles as documented by numerous news reports in 2021,” the letter reads. “While these valuation increases result in a higher resale value for the consumer, they also translate into higher property tax bills.”
The property tax on a vehicle is determined by what the state calls a fair cash value, if you sold the vehicle. The letter said the new values “represent the Department of Revenue’s effort to uphold that standard.”
State Rep. Adam Bowling said legislators learned of the memo at the same time as the general public.
“Rest assured, we will be tackling the issue in this years legislative session,” he said. “State Rep. Patrick Flannery is a good friend and a tax wizard n our GOP caucus. He is working on a bill to correct this.”
Flannery said it was his opinion that the Department of Revenue is not following existing law in the way vehicles are assessed for tax purposes.
“I saw this coming, and the first bill that I ever filed last year as a legislator (2021, HB 274) aimed to prevent this tax hike,” he posted on Facebook Monday.
“KRS 132 calls for the ad valorem tax rate to be set at the average trade-in rate for fair cash value tax purposes. The dirty secret as evidenced by the 2009 memorandum is that the Department of Revenue has defined average trade-in to mean “clean trade-in” which means the majority of automobile owners are paying more in taxes than the true condition of the vehicle.
“Today, I started work on a bill draft modeled after last year’s HB 274. I plan to file it when it’s ready to remedy this abusive practice of taxing vehicles more than they are worth and required by existing law.”