FRANKFORT, Ky. (January 11, 2022) – Representative Patrick Flannery has filed legislation to combat skyrocketing motor vehicle tax rates. HB 6 would require the Department of Revenue to use the average trade-in rate as the standard for motor vehicle valuation for property tax purposes.
According to the Office of Property Valuation, the 2022 motor vehicle valuation has increased an unprecedented 40 percent compared to 2021. “A 40% increase on your motor vehicle taxes is uncalled for,” said Representative Flannery, “and in my opinion, the Department of Revenue is not following existing law.”
Section 172 of the Kentucky Constitution requires that motor vehicles be taxed according to their “fair cash value.” The statutory standard used to determine this value is the average trade-in rate. However,in 2009 under the Steve Beshear administration, the Department of Revenue adopted a policy defining “average trade-in” rate to a higher valuation of “clean trade-in” rate.
“The dirty secret is that the Department of Revenue has defined average trade-in to mean ‘clean trade-in,’” said Flannery, “which means the majority of automobile owners are paying more in taxes than the true condition of the vehicle.”
This measure would prohibit the use of “rough trade-in” or “clean trade-in” values for standard motor vehicle valuation. The bill would apply retroactively to motor vehicles assessed on January 1, 2022, and permit refunds for overpayments made in 2022.
HB 6 is modeled after legislation Flannery sponsored in the 2021 session. “I saw this coming,” he said. “The first bill that I ever filed as legislator last year aimed to prevent this tax hike.”
House Majority Caucus