​Motor Vehicle Usage Ta​​x Implementation Guidance of HB 360 Changes for County Clerks and Consumers​​

​HB 360 amended KRS 138.450(24)  to include “recreational vehicles" within the definition of motor vehicles even if the vehicles are non-motorized. “Recreational vehicle" means any motor home, travel trailer, fifth-wheel trailer, pull-behind camper, or pop-up camping trailer, which: (a) contains living quarters; and (b) is required to be licensed for use on the public highways.

​For consistency and uniformity, the department has provided guidance to retailers and county clerks to shift taxation from sales and use tax to motor vehicle usage (MVU) tax for sales transactions between sellers and buyers beginning on or after 07/01/2023. This change does not apply to utility trailers, boat trailers, horse trailers, or trailer types that do not include living quarters. ​

​The MVU tax is due at the time the vehicle is registered and/or titled at the Kentucky county clerk's office in the same manner that other motor vehicles are taxed. Retailers should no longer collect and remit sales tax on these transactions on sales beginning on or after 07/01/2023. ​

​No.  There is no occasional sale exemption for motor vehicle usage tax within the exemptions outlined in KRS 138.470.  The occasional sale exemption applies only to transactions between private individuals that come under the application of sales and use tax law in KRS Chapter 139.​

​If the vehicle offered in trade meets the definition of motor vehicle, then the trade-in credit is allowed. For example, a non-motorized recreational vehicle trade-in can now be accepted against the purchase of a motorized motor vehicle (camping trailer for a truck). Please see above definition for the meaning of recreational vehicle.  However, a trade-in credit is still not allowed for an ATV traded in with the purchase of a car or truck.​

    • New: tax is based on affidavit sales price or MSRP
    • Used: tax is based on affidavit sales price or Retail book value, which is the current NADA Value​

​Horse trailers with living quarters do not meet the definition of a motor vehicle under the category of recreational vehicles; therefore, these trailer types are not subject to the 6% MVU tax under the provisions of KRS Chapter 138. In addition, a 2015 KY Court of Appeals decision, Department of Revenue v. Shinin B Trailer Sales, LLC, determined that horse trailers with living quarters like those in recreational vehicles are trailers exempt from sales tax under KRS 139.470(20). ​