Sticker shock in 2022 isn’t just in store for those shopping for new vehicles, or are finding that used vehicles aren’t as affordable as they once were.

Those rising values will also affect the tax bills sent out to current vehicle owners throughout the year.

According to a memo sent to county clerks’ offices around the state from the state office of valuation, the rising resale values of pre-owned vehicles will translate into a high tax burden for those who have them registered to drive.

The valuation report for Kentucky is compiled by JD Power, stated valuation office director Cathy Thompson in the memo. According to the national organization, used vehicle values have risen an unprecedented 40% over the past year.

Much of this jump had to do with factors within the motor vehicle production industry, Thompson stated in the memo.

Production of new vehicles has slowed considerably since March 2020 when many primary manufacturers, as well as support industries, closed plants because of the pandemic. While the pause in operation was initially supposed to be for a few weeks, it ultimately lasted months.

Because shutdowns around the world operated on different timetables, domestic production has been hampered by necessary components coming from elsewhere. Coupled with the broken supply chain that has prevented finished products from being delivered in a timely manner, vehicles made in the US are sitting idle waiting for components like computer chips.

In Kentucky and Indiana alone, thousands of vehicles are being stored in rented lots — including the Kentucky Speedway in Sparta — waiting for the final touches so they can be transported to dealers across the country.

The lack of availability of new vehicles has made used vehicles a premium. The market has swung quickly to the seller, with current owners able to garner near-new prices for older vehicles, with trucks being the most popular.

Dealers have been buying used vehicles at greater than average costs because of the willingness of buyers to pay more than in the past. Those prices are driven even higher by the limited availability of used cars and trucks.

Kentucky’s constitution requires that property be listed at its “fair cash value,” which is what the property would bring in a voluntary cash sale, Thompson states.

“These new values represent the department of revenue’s effort to uphold that standard,” she wrote.

The new valuations will take effect immediately and will be noted on 2022 vehicle tax assessments.

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