Legislation designed to roll back at least part of the up to 40% increase in motor vehicle property tax announced by the Department of Revenue in a letter to county Property Valuation Administrators earlier this month has been introduced in the House.

Rep. Patrick Flannery, R-Olive Hill, has said, “A 40% increase on your motor vehicle taxes is uncalled for and, in my opinion, the Department of Revenue is not following existing law. In fact, they are making their own rules and have since 2009, running the span of three gubernatorial administrations, both Republican and Democrat.”

He introduced a measure dealing with the valuation spike Monday which has received the designation House Bill 6. Single-digit bills are usually indicative of a legislative priority by a chamber’s majority leadership.

The legislation would require the average trade-in value, and not the rough trade-in value or clean trade-in value, be used as the standard value of a motor vehicle for property tax purposes. It would also grant refunds for tax overpayments and require posting of the tax refund information in each county clerk and PVA office, as well as their websites, for at least two years.

The state uses a standard valuation to set the value of vehicles. It has used the National Automobile Dealers Association or NADA book values, sometimes referred to as J.D. Powers, which publishes the valuation list.

Jill Midkiff, spokesperson for the Finance and Administration Cabinet, which oversees the Department of Revenue, notes the tax rate has not been raised.

“The state rate has remained the same as previous years. However, the value of some vehicles has increased, causing the taxes owed by some to go up.”

She explains the reason for the increase in value. “Typically, vehicle values go down over time, but the current limited supply and high demand has caused the value of some vehicles to increase. This is happening across the nation, not solely in Kentucky. The dramatic change in the used vehicle market due to the pandemic has been widely reported in both the state and national news since 2020.

“While vehicle tax rates have not been raised, this unprecedented increase in the value of some vehicles does unfortunately impact the amount of taxes owed by the vehicle owner. However, should a vehicle owner choose to sell, this increased value will likely bring a much higher resale price.”

According to Midkiff, “The percentage increase for 2022 reflects the overall total valuation compared to the 2021 overall total valuation. Not all vehicle values will see a 40% increase compared to last year.”

The tax on motor vehicles is a property tax, and Section 172 of the Kentucky Constitution states in part: “All property, not exempted from taxation by this Constitution, shall be assessed for taxation at its fair cash value, estimated at the price it would bring at a fair voluntary sale.”

“The Kentucky Department of Revenue administers the state’s tax laws as they exist,” Midkiff said. “Only the General Assembly has the constitutional authority to enact or amend law.”