What Is Kentucky Car Sales Tax and How Is It Calculated?

Kentucky does not charge a conventional sales tax on vehicles. Instead, the state collects a 6% motor vehicle usage tax when you title or register a car, truck, or motorcycle, and for a buyer the Kentucky car sales tax works much the same way a sales tax would.¹ Your county clerk collects it on the spot, and no title or plates will be issued until it is paid. What you actually owe depends on whether the vehicle is new or used, whether you bought from a dealer or a private seller, and whether a trade-in is involved.

The 6% Rate and Who Collects It

Kentucky law sets the usage tax at a flat 6% of the vehicle’s retail price, with a minimum tax of six dollars.² It applies to every motor vehicle used on Kentucky’s public highways, no matter where you bought it. Payment is due at the county clerk’s office when you apply for a title or first-time registration. There is no installment plan and no grace period: if the tax is not paid, you do not leave with a title or plates.

How the Taxable Amount Is Figured

The 6% is simple. The number it gets multiplied against is where buyers get surprised.

New Vehicles From a Dealer

On a new vehicle, the taxable amount is the total consideration you gave the dealer, including cash, the amount financed, and the value of any vehicle you traded in. Both you and the dealer attest to the figure on a notarized affidavit (Form 71A100 or Transportation Cabinet Form TC 96-182). If no affidavit is filed, Kentucky defaults to 90% of the manufacturer’s suggested retail price, with all standard and optional equipment and destination charges included.¹

Note what this means for a trade-in on a new car. Total consideration includes the value the dealer assigned to your trade, so trading in a vehicle toward a new purchase does not reduce your usage tax base.

Used Vehicles From a Dealer

When you buy used from a licensed dealer, the taxable amount is the selling price shown on the notarized affidavit. On used purchases, total consideration excludes the trade-in value the dealer assigned, so a trade-in does reduce your tax base here.³ Both the vehicle you are buying and the vehicle you are trading must be Kentucky-registered to qualify, and the trade-in has to be disclosed on the affidavit.

Private Sales and the NADA Floor

Private-party sales get the closest look because there is no dealer invoice backing up the price. Kentucky will accept the price on a notarized affidavit signed by both buyer and seller, but only if that price is at least 50% of the difference between the NADA trade-in value of the vehicle you are registering and the NADA trade-in value of anything you offered in trade.³ With no trade involved, the floor is simply 50% of the vehicle’s NADA trade-in value.

Skip the affidavit and the state taxes you on the full average retail value in the NADA Official Used Car Guide. Light trucks and automobiles use that guide; other vehicle types use the Commercial Truck Guide or the Motorcycle/ATV guide.⁴ Retail values almost always run higher than real private sale prices, so filing the affidavit is nearly always the cheaper path.

When You Owe Nothing

Kentucky exempts several categories of transfer from the 6% tax under KRS 138.470. The ones most buyers encounter:

Transfers between spouses, parents and children, stepparents and stepchildren, or grandparents and grandchildren, provided the vehicle was previously titled in Kentucky on or after July 1, 2005, or previously registered in the state.⁵
Transfers between a corporation, LLC, and proprietorship that are the same business just reorganized, if the transfer happens within six months of incorporation, organization, or dissolution.⁵
Vehicles titled to purely public charitable or educational organizations not operated for profit.⁵
Purchases by active-duty Armed Forces members stationed in Kentucky under federal orders, when the vehicle is bought from a licensed Kentucky dealer. Private sales and out-of-state purchases are not covered.⁵
Transfers by will, court order, or Kentucky’s descent and distribution statutes, if the vehicle was previously titled or registered in the state.⁵
Vehicles titled to the U.S. government, the Commonwealth of Kentucky, or any of its political subdivisions.⁵

Gifts between qualifying family members fall under the family exemption, but you still need the notarized affidavit showing zero consideration. If the people involved are not on the family list, the 6% tax applies to the NADA value even though no money changed hands.

Moving In With an Out-of-State Vehicle

Bringing a vehicle registered elsewhere into Kentucky triggers the same 6% tax when you first title or register it here. You get a credit for substantially identical state-level tax already paid to the other state. Paid 4% somewhere else? You owe the 2% difference. Paid 6% or more? You owe nothing further. Local city or county taxes paid elsewhere do not count, and the other state must offer a reciprocal credit to Kentucky residents.²

Out-of-state vehicles also need a sheriff’s inspection in the county where you plan to register, confirming roadworthiness and matching the VIN to the title. As of 2025, that inspection costs $15 for an individual owner, and it has to be done before the clerk can process your registration.

What to Bring to the County Clerk

The whole transaction happens at the county clerk’s office in your county of residence. Bring:

The original title from the previous owner, dealer, or out-of-state jurisdiction, properly signed over to you.
The notarized Affidavit of Total Consideration Given for a Motor Vehicle (Form 71A100), signed by both buyer and seller, showing the VIN, selling price, and any trade-in allowance. A dealer usually fills this out for you.⁶
Proof of Kentucky insurance.
The sheriff’s inspection report, if the vehicle was last titled or registered out of state.

The clerk calculates the 6% from these documents and collects it on the spot. Most offices accept cash, checks, and cards, though cards may carry a small processing fee. Separate from the usage tax, expect a $9 title fee, a $21 annual registration fee, and a $22 lien recording fee if you financed. The clerk cannot issue a title or registration until the usage tax is paid, so the deadline is effectively the day you walk in.²

Getting Money Back If the Vehicle Was Overvalued

If you were taxed on a vehicle whose condition was noticeably worse than the NADA guide assumed, you can apply for a refund. File Form 71A010 (Vehicle Condition Refund Application) with at least two pieces of supporting evidence: repair estimates, repair receipts, parts receipts, or photographs showing both the damage and the VIN plate.⁷

Only the person listed on the Kentucky title application can file, and the claim must reach the Department of Revenue’s Motor Vehicle Usage Tax Section in Frankfort within four years of the date you paid the tax to the clerk. Local Taxpayer Service Centers can help you complete the form, but they do not process the refund themselves.⁷

1
Kentucky Department of Revenue. Motor Vehicle Usage Tax
2
Kentucky Legislative Research Commission. Kentucky Code 138.460 – Motor Vehicle Usage Tax – Imposition – Rate – Collection – Refunds
3
Kentucky Department of Revenue. Motor Vehicle Usage Tax
4
Kentucky Legislative Research Commission. 103 KAR 44:060 – Motor Vehicle Usage Tax Valuation
5
Justia Law. Kentucky Revised Statutes 138.470 – Exemptions From Tax
6
Kentucky Department of Revenue. Affidavit of Total Consideration Given for a Motor Vehicle
7
Kentucky Department of Revenue. Motor Vehicle Usage Tax Vehicle Condition Refund Application