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-UNOFFICIAL COPY  26 RS BR 1601
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-AN ACT relating to an ad valorem tax exemption for motor vehicles. 1
-Be it enacted by the General Assembly of the Commonwealth of Kentucky: 2
-Section 1.   KRS 132.4851 is amended to read as follows: 3
-(1) (a) For the January 1, 2022, and January 1, 2023, assessment dates, when a motor 4
-vehicle is assessed under KRS 132.485, the portion of property taxes 5
-computed on any increase in the moto r vehicle's valuation from January 1, 6
-2021, shall be exempt from state and local ad valorem taxes, including the 7
-county, city, school, or other taxing district in which the motor vehicle has 8
-taxable situs. 9
-(b)[(2)] Taxpayers who paid motor vehicle property  taxes for the January 1, 10
-2022, assessment date on any increase in their motor vehicle's valuation from 11
-January, 1, 2021, shall be entitled to a refund of the overpayment of taxes 12
-under the exemption provided in this subsection[section]. Notwithstanding 13
-KRS 134.590, the department and county clerks shall work together to 14
-establish procedures that enable taxpayers to receive refunds without making 15
-a written request. Refunds issued under this paragraph[subsection] shall be 16
-issued within ninety (90) days of March 10, 2022. 17
-(2) (a) On or after the January 1, 2027, assessment date, motor vehicles assessed 18
-under KRS 132.485 shall be exempt from ad valorem tax for state purposes. 19
-(b) Nothing in this subsection shall be construed to exempt a motor vehicle 20
-assessed under KRS 132.485 from the usage tax imposed by KRS 138.460 or 21
-from any applicable local ad valorem taxes assessed by a county, city, 22
-school, or other taxing district in which it has a taxable situs. 23
-Section 2.   KRS 132.020 is amended to read as follows: 24
-(1) The owner or person assessed shall pay an annual ad valorem tax for state purposes 25
-at the rate of: 26
-(a) Thirty-one and one-half cents ($0.315) upon each one hundred dollars ($100) 27
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-of value of all real property directed to be assessed for taxation; 1
-(b) Twenty-five cents ($0.25) upon each one hundred dollars ($100) of value of 2
-all motor vehicles qualifying for permanent registration as histori c motor 3
-vehicles under KRS 186.043; 4
-(c) Fifteen cents ($0.15) upon each one hundred dollars ($100) of value of all: 5
-1. Machinery actually engaged in manufacturing; 6
-2. Commercial radio and television equipment used to receive, capture, 7
-produce, edit, enhance, modify, process, store, convey, or transmit audio 8
-or video content or electronic signals which are broadcast over the air to 9
-an antenna, including radio and television towers used to transmit or 10
-facilitate the transmission of the signal broadcast and eq uipment used to 11
-gather or transmit weather information, but excluding telephone and 12
-cellular communication towers; and 13
-3. Tangible personal property which has been certified as a pollution 14
-control facility as defined in KRS 224.1 -300. In the case of tangib le 15
-personal property certified as a pollution control facility which is 16
-incorporated into a landfill facility, the tangible personal property shall 17
-be presumed to remain tangible personal property for purposes of this 18
-paragraph if the tangible personal pro perty is being used for its intended 19
-purposes; 20
-(d) Ten cents ($0.10) upon each one hundred dollars ($100) of value on the 21
-operating property of railroads or railway companies that operate solely 22
-within the Commonwealth; 23
-(e) Five cents ($0.05) upon each one  hundred dollars ($100) of value of goods 24
-held for sale in the regular course of business, which includes: 25
-1. Machinery and equipment held in a retailer's inventory for sale or lease 26
-originating under a floor plan financing arrangement; 27
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-2. Motor vehicles: 1
-a. Held for sale in the inventory of a licensed motor vehicle dealer, 2
-including licensed motor vehicle auction dealers, which are not 3
-currently titled and registered in Kentucky and are held on an 4
-assignment pursuant to KRS 186A.230; or 5
-b. That are in the possession of a licensed motor vehicle dealer, 6
-including licensed motor vehicle auction dealers, for sale, although 7
-ownership has not been transferred to the dealer; 8
-3. Raw materials, which includes distilled spirits and distilled spirits 9
-inventory; 10
-4. In-process materials, which includes distilled spirits and distilled spirits 11
-inventory, held for incorporation in finished goods held for sale in the 12
-regular course of business; and 13
-5. Qualified heavy equipment; 14
-(f) One and one -half cents ($0.015) upon each o ne hundred dollars ($100) of 15
-value of all: 16
-1. Privately owned leasehold interests in industrial buildings, as defined 17
-under KRS 103.200, owned and financed by a tax -exempt governmental 18
-unit, or tax -exempt statutory authority under the provisions of KRS 19
-Chapter 103, upon the prior approval of the Kentucky Economic 20
-Development Finance Authority, except that the rate shall not apply to 21
-the proportion of value of the leasehold interest created through any 22
-private financing; 23
-2. Qualifying voluntary environmental  remediation property, provided the 24
-property owner has corrected the effect of all known releases of 25
-hazardous substances, pollutants, contaminants, petroleum, or petroleum 26
-products located on the property consistent with a corrective action plan 27
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-approved by the Energy and Environment Cabinet pursuant to KRS 1
-224.1-400, 224.1-405, or 224.60-135, and provided the cleanup was not 2
-financed through a public grant or the petroleum storage tank 3
-environmental assurance fund. This rate shall apply for a period of th ree 4
-(3) years following the Energy and Environment Cabinet's issuance of a 5
-No Further Action Letter or its equivalent, after which the regular tax 6
-rate shall apply; 7
-3. Tobacco directed to be assessed for taxation; 8
-4. Unmanufactured agricultural products; 9
-5. Aircraft not used in the business of transporting persons or property for 10
-compensation or hire; 11
-6. Federally documented vessels not used in the business of transporting 12
-persons or property for compensation or hire, or for other commercial 13
-purposes; and 14
-7. Privately owned leasehold interests in residential property described in 15
-KRS 132.195(2)(g); and 16
-(g) Forty-five cents ($0.45) upon each one hundred dollars ($100) of value of all other 17
-property directed to be assessed for taxation shall be paid by the ow ner or person 18
-assessed, except as provided in KRS 132.030, 132.200, 136.300, and 136.320 and 19
-Section 1 of this Act, providing a different tax rate for particular property. 20
-(2) Notwithstanding subsection (1)(a) of this section, the state tax rate on real pr operty 21
-shall be reduced to compensate for any increase in the aggregate assessed value of 22
-real property to the extent that the increase exceeds the preceding year's assessment 23
-by more than four percent (4%), excluding: 24
-(a) The assessment of new property as defined in KRS 132.010(8); 25
-(b) The assessment from property which is subject to tax increment financing 26
-pursuant to KRS Chapter 65; and 27
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-(c) The assessment from leasehold property which is owned and financed by a 1
-tax-exempt governmental unit, or tax -exempt statutory authority under the 2
-provisions of KRS Chapter 103 and entitled to the reduced rate of one and 3
-one-half cents ($0.015) pursuant to subsection (1)(f) of this section. In any 4
-year in which the aggregate assessed value of real property is less than the 5
-preceding year, the state rate shall be increased to the extent necessary to 6
-produce the approximate amount of revenue that was produced in the 7
-preceding year from real property. 8
-(3) By July 1 each year, the department shall compute the state tax rate applicable to 9
-real property for the current year in accordance with the provisions of subsection 10
-(2) of this section and certify the rate to the county clerks for their use in preparing 11
-the tax bills. If the assessments for all counties have not been certified by July 1, the 12
-department shall, when either real property assessments of at least seventy -five 13
-percent (75%) of the total number of counties of the Commonwealth have been 14
-determined to be acceptable by the department, or when the number of counties 15
-having at least seventy -five percent (75%) of the total real property assessment for 16
-the previous year have been determined to be acceptable by the department, make 17
-an estimate of the real property assessments of the uncertified counties and compute 18
-the state tax rate. 19
-(4) If the tax rate set by the department as provided in subsection (2) of this section 20
-produces more than a four percent (4%) increase in real property tax revenues, 21
-excluding: 22
-(a) The revenue resulting from new property as defined in KRS 132.010(8); 23
-(b) The revenue from property which is subject to tax increment financing 24
-pursuant to KRS Chapter 65; and 25
-(c) The revenue from leasehold property which is owned and financed by a tax -26
-exempt governmental unit, or tax -exempt statutory authority unde r the 27
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-provisions of KRS Chapter 103 and entitled to the reduced rate of one and 1
-one-half cents ($0.015) pursuant to subsection (1) of this section; 2
- the rate shall be adjusted in the succeeding year so that the cumulative total of each 3
-year's property tax revenue increase shall not exceed four percent (4%) per year. 4
-(5) The provisions of subsection (2) of this section notwithstanding, the assessed value 5
-of unmined coal certified by the department after July 1, 1994, shall not be included 6
-with the assessed v alue of other real property in determining the state real property 7
-tax rate. All omitted unmined coal assessments made after July 1, 1994, shall also 8
-be excluded from the provisions of subsection (2) of this section. The calculated 9
-rate shall, however, be applied to unmined coal property, and the state revenue shall 10
-be devoted to the program described in KRS 146.550 to 146.570, except that four 11
-hundred thousand dollars ($400,000) of the state revenue shall be paid annually to 12
-the State Treasury and credited  to the Office of Energy Policy for the purpose of 13
-public education of coal-related issues. 14
+Page 1
+Local Government Mandate Statement
+Kentucky Legislative Research Commission
+2026 Regular2026 Regular Session
+
+Part I:  Measure Information
+
+Bill Request #: 1601 Bill #: HB 916
+Document ID #: 2808 Sponsor: Rep. Savannah Maddox
+Bill Title: AN ACT relating to an ad valorem tax exemption for motor vehicles.
+
+Unit of ☐ City ☒ County ☒ Urban-County
+Government: ☒ Charter County ☒ Consolidated Local ☒ Unified Local
+
+Office(s) Impacted: County Clerks
+
+Requirement: ☒ Mandatory ☐ Optional
+
+Effect on Powers
+& Duties:
+
+☒ Modifies Existing ☐ Adds New ☐ Eliminates Existing
+
+Other Fiscal Statement(s)
+that may exist:
+☐ Actuarial Analysis ☐ Corrections Impact
+☐ Health Benefit Mandate ☐ State Employee Health Plan
+
+Part II:  Bill Provisions and the Estimated Fiscal Impact Relating to Local Government
+
+HB 916 would amend KRS 132.4851 to exempt motor vehicles assessed under KRS
+132.485 from state property taxes. HB 916 would not prohibit ad valorem taxes imposed
+by a county, city, school, or other taxing district in which it has a taxable situs.
+
+HB 916 is expected to have a significant negative impact on revenue received by
+county clerks.
+KRS 134.805 provides the county clerks with a 4% commission on state taxes collected.
+The commission collected in 2025 by the clerk was $24,829,506.95. If HB 916 is
+enacted, the county clerks will no longer receive this commission annually. The exact
+impact is indeterminable, and depends upon the number of motor vehicles assessed in
+each county.
+
+Data Source(s): LRC Staff, KYTC
+
+Preparer: BW Reviewer: AS (MDA) Date: 1/20/26