Bill
HB 916
HB 916 would eliminate the state portion of motor vehicle ad valorem taxes beginning 2027, shifting the tax burden to local districts that may impose their own taxes.
HB 916 (2026 Reg. Session, Kentucky) – Summary
Purpose and intent
- The bill proposes to exempt motor vehicles assessed under Kentucky’s ad valorem framework (KRS 132.485) from state ad valorem taxes, beginning with the January 1, 2027 assessment date. It retains the ability for local taxing districts (county, city, school, etc.) to impose ad valorem taxes if those districts choose to do so.
- In effect, it would eliminate the state portion of ad valorem taxes on motor vehicles for state purposes, while not prohibiting local taxes based on situs.
Key provisions and changes
1) Exemption of motor vehicles from state ad valorem taxes
- Section 1, amendments to KRS 132.4851:
- For assessment dates on January 1, 2027 and thereafter, motor vehicles assessed under KRS 132.485 would be exempt from state ad valorem taxes.
- The exemption does not affect the use or collection of other taxes (e.g., usage tax under KRS 138.460) or local ad valorem taxes assessed by counties, cities, schools, or other districts where the vehicle has taxable situs.
- The historical temporary exemptions for 2022 and 2023 (increase in valuation from 2021) remain described, including refunds for those who paid during the 2022 assessment window. The bill text notes refunds would be processed with procedures coordinated by the department and county clerks, with refunds issued within 90 days of March 10, 2022, under that previous provision.
2) Administrative and refund mechanics (existing provisions retained)
- The bill preserves language detailing existing refunds and administrative cooperation for the 2022 exemption period, including timelines for refunds and coordination between the department and county clerks.
3) State tax rate framework for other property (unchanged framework)
- Section 2 retains the structure of the state real property tax rate setting framework for other property categories (real property, historic vehicles, manufacturing machinery, pollution control property, rail operating property, inventory-held goods, etc.). It does not alter the rate-setting mechanics for non-motor-vehicle property.
- The section describes the rate components (e.g., state ad valorem rates per $100 of value across categories) and annual rate setting and adjustment rules intended to keep statewide revenue growth within established limits, with provisions for adjustments in years with revenue changes.
Who is affected
- Motor vehicle owners and their property tax bills at the state level.
- County clerks and their offices, which administer motor vehicle ad valorem taxes and currently receive a commission on state taxes collected (KRS 134.805).
- Local taxing districts (counties, cities, school districts, etc.) would still be able to levy local ad valorem taxes on motor vehicles if applicable, since the exemption is limited to state taxes.
- Potential fiscal impact on clerk commissions and local revenue.
Procedural and timeline notes
- Effective date for the state motor vehicle exemption: on or after January 1, 2027 assessment date.
- Prior-year (2022/2023) exemption provisions and refunds remain described in the bill language but are superseded in effect by the 2027 and beyond exemption.
- By July 1 each year, the department determines the real property tax rate for the current year (for non-motor-vehicle property); the bill does not alter those procedures, but the motor vehicle tax exemption would reduce state revenue from motor vehicles beginning 2027.
Fiscal and governance impact
- Significant negative impact on state revenue from motor vehicles due to the elimination of the state portion of motor vehicle ad valorem taxes.
- County clerks would lose the associated 4% commission on state taxes collected (KRS 134.805), altering clerks’ revenue streams; the exact impact depends on the number of motor vehicles in each county and is not precisely determinable from the bill text.
- Local revenue from motor vehicle ad valorem taxes could continue if local districts impose or maintain their own local taxes; the bill clarifies that local taxes remain possible despite the state exemption.
Sponsor and status
- Primary sponsor: Rep. Savannah Maddox; co-sponsors: Rep. Josh Calloway.
- Current actions: introduced March 4, 2026; referred to appropriate committees; later career progress indicated as of March 11, 2026 (to Appropriations & Revenue).
Overall assessment
- HB 916 would shift the burden of motor vehicle ad valorem taxation away from the state and onto the local tax framework if applicable, while maintaining the ability of local jurisdictions to impose local taxes. It introduces a significant statewide revenue change and would alter county clerks’ compensation related to state tax administration.
Compiled from official sources — confirm details with the bill’s official record.
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