AutoTaxCalculatorKentucky car sales tax: the 6% usage tax
Kentucky usage tax = 6% × the vehicle's "retail price," which depends on what you're registering. A new car with $40,000 in total consideration (including a $12,000 trade-in) owes $2,400. A used car bought for $18,000 with a $6,000 trade-in owes $720.
KRS 138.460 levies 6% on the retail price of every motor vehicle used in Kentucky. The county clerk collects it when a vehicle is titled or registered in Kentucky for the first time, and on every transfer of a vehicle already titled here. The clerk can't issue a title, registration or plates until it's paid. The clerk keeps 3% of the tax for collecting it. The tax is never less than $6 on a first titling or registration.
What "retail price" means
| Vehicle | Taxable retail price |
|---|---|
| New, demonstrator or previous model year | Total consideration given, including the value of any vehicle traded in. Without a notarized affidavit, clerks use 90% of MSRP with all equipment and destination charges. |
| Used | Total consideration minus the trade-in allowance, on a notarized affidavit. It can't be less than 50% of the difference between the two vehicles' book trade-in values. |
| New resident's used vehicle | The trade-in value in the reference manual, or $100 if it's too old to be listed |
| Gift | The trade-in value in the reference manual |
| Historic vehicle | $100 |
"Total consideration given" is everything you pay, in money or otherwise, for the vehicle and all its standard and optional equipment. Three things are left out: manufacturer or dealer rebates applied to the purchase at the time of sale, interest over the life of the loan, and items that aren't equipment, like extended warranties, service contracts and promotional giveaways.
Why trade-ins work differently on new cars
For a new car, county clerks describe the consideration as the cash or amount financed plus the value of any vehicle traded in. Trading in a $12,000 car toward a $40,000 new one doesn't lower the tax: you're still taxed on $40,000. On a used car, the trade-in allowance comes off, as long as it's shown on the notarized affidavit. Clerks note that used cars bought out of state now get the trade-in credit too.
The 50% floor on used cars: if you report a price far below the car's value, the clerk taxes at least half the book-value difference. Say a car books at $17,000 and your trade at $5,000. The taxable price can't be below 50% × $12,000 = $6,000, whatever the affidavit says.
Title and registration fees
| Fee | Amount |
|---|---|
| Kentucky title (mailed in 4–6 weeks) | $9.00 |
| Speed title (printed and mailed the day you apply) | $25.00 |
| Title lien statement recording | $22.00 |
| Standard registration, 12 months | up to $21.00 |
| Motorcycle registration | $17.75 |
| Sheriff's VIN inspection (out-of-state vehicles) | $5.00 |
LaRue County lists the yearly renewal at $21. Shelby County lists $20 for an automobile and $21 for commercial trucks up to 10,000 lbs. Renewals are done in your county of residence, in person or by mail, but an expired registration can't be renewed by mail.
The yearly vehicle property tax
Kentucky also taxes vehicles as property. The property valuation administrator assesses every vehicle titled in Kentucky as of January 1, and each taxing jurisdiction (county, school board, fire district and so on) sets its rate. The tax is due when you renew or change the registration. Whoever owned the vehicle on January 1 owes that year's tax, even if it's sold before renewal. Unpaid taxes on a vehicle can block a transfer.
Worked examples
New SUV, $28,000 financed plus a $12,000 trade-in
- Total consideration: $28,000 + $12,000 = $40,000
- Usage tax: $40,000 × 6% = $2,400.00
- Title $9 + registration $21 + lien $22
- Total: $2,452.00
Used car for $18,000 with a $6,000 trade-in (book values $17,000 and $5,000)
- Price less trade-in: $12,000. The floor is 50% × $12,000 = $6,000, so $12,000 stands.
- Usage tax: $12,000 × 6% = $720.00
- Title $9 + registration $21 = $750.00
Moving to Kentucky with a car worth $15,000 in trade, after paying $1,200 tax in your old state
- Usage tax on the book value: $15,000 × 6% = $900
- Credit for the similar tax you paid: up to $900, so $0 due, if your old state gives the same credit for Kentucky tax
Frequently asked questions
How soon must I title a car in Kentucky?
Within 15 days of buying it, or of bringing it into Kentucky from another state. Bring the original title, proof of insurance, proof of any tax paid elsewhere, and a sheriff's inspection of the VIN for an out-of-state vehicle.
Can I get the tax back if I return the car?
Yes. If you return a vehicle to the same dealer within 60 days for a replacement or refund, you can get the usage tax refunded. The same goes for a manufacturer buyback or replacement within 90 days for a defect.
What if I'll never drive it on public roads?
With a signed affidavit of nonhighway use, the clerk collects regular Kentucky sales and use tax instead of the usage tax.
Sources
- KRS 138.450: Definitions (retail price, total consideration, trade-in allowance)
- KRS 138.460: Motor vehicle usage tax, imposition and rate
- Kentucky Department of Revenue: Motor Vehicle Taxes
- LaRue County Clerk: Usage Tax & Fees
- Shelby County Clerk: Motor Vehicle Fees
This calculator gives an estimate. Your county clerk calculates the final amount. How we calculate