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WKYT Investigates: Rising car taxes

Even if you’re not buying a new car this year, you’ll likely pay more in car taxes.
Published: Dec. 2, 2021 at 2:50 PM EST|Updated: Jan. 5, 2022 at 12:03 PM EST
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LEXINGTON, Ky. (WKYT) - All drivers will likely pay more in car taxes this year.

Demand is high for new and used vehicles, and when the value goes up, state transportation leaders say, so do your taxes.

“There’s a real domino effect from the shortage of new cars,” says iSeeCars Executive Analyst Karl Brauer.

Brauer says a lack of supply leads to a rise in value, and that can create a higher car tax.

“Now you see things like a Toyota Corolla or a GMC Terrain or a Toyota RAV 4 - these vehicles have all gone up in between 29 and 33% in the last year, since last August,” says Brauer. “It’s a 30% increase on 45 cents for every hundred dollars, so I don’t think it’s going to be massive depending on which kind of car you own, but I think most people will be surprised because normally cars lose value over time and your taxes go down every year, not up.”

According to Kentucky’s Division of State Valuation, the average car value for a vehicle in Kentucky increases 3 to 4% each year. Last year, the average value was up 11%.

The Commonwealth pays a third-party - J.D. Power - to put a value on a vehicle.

“Our Commonwealth Office of Technology runs a program that takes that file from JD Power and matches it up against their data with our VIN, so it matches up against a VIN and it puts in your trade-in value as of January 1st,” says Division Director Cathy Thompson.

Thompson says car owners can dispute their vehicle’s personal property tax.

“If it’s been wrecked, it’s been damaged, it has high miles, they can go to the PVA to provide documentation to justify why their vehicle does not meet the value that’s being applied,” notes Thompson.

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