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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 motor 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, 2026, 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 UNOFFICIAL COPY 25 RS BR 1005
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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 historic 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 equipment 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 tangible 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 property 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 UNOFFICIAL COPY 25 RS BR 1005
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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 one 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 UNOFFICIAL COPY 25 RS BR 1005
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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 three 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 owner or person 18
assessed, except as provided in KRS 132.030, 132.200, 136.300,[ and] 136.320, 19
and 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 property 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 UNOFFICIAL COPY 25 RS BR 1005
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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 under the 27 UNOFFICIAL COPY 25 RS BR 1005
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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 value 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