The excise tax in Kentucky is 6% of a car’s retail price, to be paid whenever the vehicle is transferred or registered. You can pay online or with a check or money order directly to the Kentucky Department of Revenue.

Taxes can be confusing. Whether you’re figuring out how much to pay or which taxes you need to pay, you’ll want to make sure you’re getting the most accurate information. If you don’t, you could end up paying some serious consequences. One tax you need to know about is excise tax.

If you live in Kentucky, you’ve come to the right place. Here with everything you need to know about Kentucky excise tax is

Jerry

, the

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comparison app. We’ll go over what excise tax is, how to pay it, and how to save money on

Kentucky car insurance costs

What is an excise tax in Kentucky?

In Kentucky, excise tax is a tax imposed by the government on certain commercial goods. The most common excise tax is on gasoline, though the “sin taxes” on cigarettes and alcohol are also considered excise taxes.

Excise tax is different than typical Kentucky sales tax, which applies to all sales that qualify and is paid by the end consumer—i.e., the person whose hands the goods end up in.

Excise tax is paid by the merchant in order to sell certain goods. In Kentucky, merchants might even need to attach tax stamps to goods to prove that the excise tax has been paid and the goods are ready for legal sale.

No need for tax stamps on your car, though. The Kentucky Department of Transportation just needs to collect a registration fee or retitling fee at a rate of 6% of the car’s retail price. However, this is essentially just a renamed excise tax.

If you recently purchased your vehicle and need to pay the vehicle usage tax, contact your county clerk. If you received a bill from the Kentucky Department of Revenue, you can pay online at revenue.ky.gov or mail a check or money order to the Kentucky Department of Revenue.

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Title transfer in Kentucky

Calculating your excise tax payment

If you want to know what to expect from your upcoming excise tax payment, or you just want to double-check if the amount you’re being charged is accurate, you can calculate the amount on your own by referring to the table below.

Year you bought your vehicle	How to calculate excise tax
Year before the model year (e.g., a 2023 model purchased in 2022)	50% of MSRP
Model year	90% of MSRP
Second year after model year	60% of MSRP
Third year after model year	40% of MSRP
Fourth year after model year	25% of MSRP
Fifth year and all succeeding years	10% of MSRP

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For example, if you bought a 2020

Kia Soul

in the year 2022, 60% of the MSRP of $17,490 would be around $10,494. Then, all you need to do is use that number to calculate your excise tax. In this case, the 6% tax would be somewhere close to $626.64.

Penalties for nonpayment

If you fail to pay your excise tax in Kentucky, you could face some serious consequences. You’ll be fined between $25 and $1,000, and you’ll be found guilty of a Class A misdemeanor. If you intentionally evade paying these taxes, the punishments only grow greater.

Depending on how much you fail to pay, it gets even worse. If the amount you failed to pay is less than $250, you’ll tack on another Class B misdemeanor. But if it’s greater than $250, you’ll have another Class A misdemeanor on your record.

The difference between classes lies in their punishments. Class A misdemeanors are punishable by up to 12 months in jail, whereas Class B misdemeanors are punishable by 90 days or fewer. Class B misdemeanors can also only impose fines of up to $250, instead of $500 for a Class A misdemeanor.

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Kentucky car insurance laws—all you need to know

How to avoid excise tax in Kentucky

Luckily, there are plenty of exemptions from the vehicle usage tax—20 to be exact. The full list can be found on the

Kentucky legislature website

, but most of them have to do with the manner in which the car is transferred, to whom the car is transferred, and the type of vehicle. For example, commercial buses are exempt from vehicle usage tax.

There are also some exceptions made available to vehicles being held in a trust, or vehicles that will soon be passed down to subsidiaries. You might also be exempt if the vehicle has a large towing capacity or if it’s used for farming purposes.

No matter the exception, be sure to carefully read through the list and determine if you need to pay excise tax. If you make a mistake, you could face all of the same punishments discussed above.

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How to donate a car in Kentucky

How to save on car insurance in Kentucky

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