Lawmakers hear about motor vehicle usage tax legislation

Lawmakers hear about motor vehicle usage tax legislation June 25, 2025

The Interim Joint Committee on Veterans, Military Affairs and Public Protection discussed a proposal Wednesday that would exempt veterans and service members from paying Kentucky’s motor vehicle usage tax. Pictured here in this high-resolution file photo are the Kentucky State Capitol and the Capitol Rose Garden.

FRANKFORT — Some legislators want to attract veterans and service members to Kentucky, and members of the Interim Joint Committee on Veterans, Military Affairs and Public Protection learned about legislation Wednesday that could help those groups save money.

Rep. Peyton Griffee, R-Mount Washington, told the committee that he is working on legislation to help draw veterans and service members to the commonwealth by exempting them from the motor vehicle usage tax.

“There’s a 6% tax on motor vehicle usage, and a lot of folks are paying this when they move from somewhere else into the commonwealth. They’re getting hit with this 6% tax,” he said.

Griffee said the tax is burdening retirees who want to move back to Kentucky and soldiers who have a permanent change of station to Fort Knox or Fort Campbell. He said he is studying the cost of his proposal but believes it would have low financial impact to the state.

Committee Co-Chair Sen. Matthew Deneen, R-Elizabethtown, said the bill isn’t new, and he’d like to see it win approval during the 2026 Regular Session, which begins in January.

“When I first came to Frankfort, this was one of the bills that I was trying to tackle at the time. Of course, it’s dealing with revenue and taxes and all of that. It has to begin in the House,” he said.

Griffee, a reservist himself, said some veterans and service members have paid the tax twice – once in their previous state and once again when they come to Kentucky. He said the legislation would produce good outcomes if passed, and he called it another tool to keep people who come here to serve.

“These are people that are trained. They are excellent, excellent folks that we want to keep for economic development, add to our workforce,” he said. “So, this is an easy recruiting tool for our state.”

Griffee also said he would like to extend the tax break for reservists and National Guardsmen in the legislation and plans to work with those groups on the proposal.

Senate Minority Whip David Yates, D-Louisville, asked if there is a limit on how many vehicles could be affected by the legislation.

“If you wind up being kind of a part-time car dealer, where I guess you get six or so many you can run through, then you would avoid that at the clerk’s office,” he asked.

Griffee said it was a good and fair question.

“I think the intent of the bill is for personal use vehicles, and if we need to tweak that language, look at that a little bit, I think that would be something we could definitely look at,” he said.

Sen. Craig Richardson, R-Hopkinsville, thanked Griffee for the legislation, and said that while it would probably have minimal financial impact, it would send an important message.

“It certainly goes a long way in waving the flag; that we’re open for business for veterans and active duty here in Kentucky,” he said.

Sen. Aaron Reed, R-Shelbyville, said he lived in several places – including Alaska, Hawaii and Virginia – when he was a service member. When he moved back to Kentucky with a vehicle he purchased in Alaska, he was concerned about the $1,400 or $1,500 in motor vehicle taxes.

“For a new guy coming off of active duty back into the civilian world, that was a kick in the teeth because I had to come up with it or I couldn’t drive my truck,” he said.

Deneen said there are some compacts between Kentucky and other states regarding waiving the motor vehicle tax. However, one doesn’t exist with Georgia.

“Regardless of what Georgia does, I want Kentucky to be veteran friendly, active duty friendly. I want them to reside here and retire here, and so I support this, your efforts here, and I hope we can see this move forward in this next session,” he said.

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https://apps.legislature.ky.gov/publicservices/pio/release.html#VMAP-062525