Rising value of vehicles may lead to property tax increase
FRANKFORT, Ky. (AP) — The rising value of used vehicles during the pandemic may lead to a hefty increase in property taxes on them, Kentucky officials said.
“Overall, the 2022 valuation increases for vehicles compared to vehicles the same time last year is up approximately 40 percent,” Kentucky Department of Revenue director of valuation Cathy Johnson said in a Jan. 6 letter to county property value administrators.
The new values for vehicles in Kentucky are set in December and are based on the National Automobile Dealers Association book values, the Lexington Herald-Leader reported. The Kentucky constitution says the state has to set values based on fair cash values that come from a standard manual.
That means the cost of vehicle tags in 2022 will go up if lawmakers don’t intervene, Fayette County Property Value Administrator David O’Neill told the newspaper.
For example, a 2014 Ford F150 was valued at $9,400 last year and the tax would have been around $133. It’s value now is $15,800 and the tax would be about $193, he said.
Used car prices have soared as new cars became more scarce because of supply chain shortages caused by the coronavirus pandemic.
“It’s unfortunate,” said O’Neill. “I am hoping the legislature will be able to address this by possibly using valuations from two years ago.”
Lawmakers have filed two bills aimed at giving taxpayers relief from escalating vehicle property taxes.
A House bill would allow the revenue department to use a different standard to determine a car’s value than the current method. The bill also would allow people who already paid car tags to get a refund for overpayment. The measure was introduced by Republican Rep. Patrick Flannery and several other House members.
A Senate bill would direct the revenue department to use last year’s vehicle property values to determine car tax rates in 2022 and 2023. The bill was filed by Republican Sen. Jimmy Higdon.
Gov. Andy Beshear said Monday that there was an effort on social media to blame his administration for the increase in vehicle taxes. The administration has no control over the value of used cars, he said.
“This administration has not increased vehicle tax rates,” Beshear said. “That’s not what is happening. What has happened is your car is worth more.”