Sticker shock: Rising used car values mean car tags in Kentucky will be higher in 2022.
Due to rising used car values during the pandemic, property taxes on vehicles in Kentucky will be much, much higher this year, local and state officials warn.
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.
The Kentucky constitution says the state has to set values based on fair cash value. A Kentucky statute also says those valuations must come from a standard manual such as NADA or Kelley Blue Book.
Those new values are set in late December, prior to the new calendar year.
“Overall, the 2022 valuation increases for vehicles compared to vehicles the same time last year is up approximately 40 percent,” said Cathy Johnson, the director of valuation in the Kentucky Department of Revenue, in a Jan. 6 letter to county property value administrators, commonly called PVAs.
The increase in car taxes has become politicized.
Gov. Andy Beshear, in a press conference Monday, said there have been coordinated efforts on social media to blame the Beshear administration for the increase.
“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.”
Car taxes are a percentage of that car’s value. Since car values are skyrocketing, car tags will go up if the General Assembly doesn’t step in, said David O’Neill, the Fayette County Property Value Administrator.
People pay those car taxes or car tags in the month of their birthday.
How fast are car values rising? How much more will pay people in car taxes this year?
A 2014 Ford F150 was valued at $9,400 last year. It’s new value is $15,800, O’Neill said. NADA sets those valuations based on car sales the prior year.
The owner of the 2014 Ford F150 paid around $133 in automobile taxes in 2021. In 2022, the owner will pay $193, a 45 percent increase from the prior year.
The owner of a 2019 Toyota Camry LE paid $202.69 in automobile taxes in 2021, based on a NADA trade in value of $16,660. In 2022, the owner of the same car will pay $295.48, based on a trade in value of $24,200. That’s a 46 percent increase in taxes.
Due to supply chain hiccups caused by the coronavirus pandemic, new car production has been stymied, leading to an increase in demand for used cars, upping used car values and now taxes.
“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.”
O’Neill said it would take legislation to roll back those values since the constitution and state law says vehicle values must be based on fair cash values determined each year by a standard manual.
Two bills were filed Monday to give taxpayers a break on this year’s car tags.
House Bill 6 would allow the Department of Revenue more leeway in how it determines a car’s value. Senate Bill 75 would use last year’s car values to determine vehicle property taxes for 2022 and 2023.
This story was originally published January 10, 2022 at 4:57 PM.
