Beshear signs executive order to freeze vehicle property tax, proposes lower sales tax legislation

Kentucky Gov. Andy Beshear signed an executive order Wednesday freezing vehicle property tax rates.

This is an issue the legislature has been working on and bills are moving through the process. However, Beshear’s executive order immediately stops an increase in vehicle property taxes caused by soaring used car values.

The property valuation for the average motor vehicle in Kentucky rose from $8,006 to $11,162 in just one year.

This change will allow Kentuckians to pay a tax amount similar to last year and noted anyone who has already paid their 2022 taxes will get a refund from their local county clerk’s office.

Beshear said the executive order will help Kentuckians as the state and nation experience extreme inflation hitting a 40-year high and causing struggles for Kentucky families.

At the press conference, he was joined by Democratic state Rep. Angie Hatton, who announced she is introducing legislation to cut the state sales tax by 1% for two years to offset inflation.

The bill would cut the sales tax from 6% to 5% from July 1, 2022 through June 30, 2023.

Hatton noted there are many discussions happening around tax reform in Kentucky and an appetite from legislators to make long-term changes to the tax code. She said “while some of that is definitely needed,” this proposal is focused more on short term relief.

The governor will also propose adjustments to his recommended budget to accommodate the reduction in revenues the state would see if the sales tax was reduced.

During the press conference, Beshear commented other tax proposals being discussed by the legislature and the Kentucky Chamber are focused on consumption rather than taxing income and he disagrees with that approach.

Kentucky Chamber President and CEO Ashli Watts had the following to say about Beshear’s comments and proposal:

“Kentucky’s business community continues to advocate for a tax code that will help Kentucky grow and compete. We know from Census data that low- and no-income tax states are growing faster than states like Kentucky. By reducing taxes on work, we can keep more money in hard-working Kentuckians’ pockets while also growing our population and our economy and increasing wages. Minor temporary changes to our tax code will not set Kentucky on a path to long-term growth.”