KentuckySB 1102026 Regular SessionSenateWALLET

AN ACT relating to motor vehicles and declaring an emergency.

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Bill Overview

Analyzed Economic Effects

29 provisions identified: 9 benefits, 10 costs, 10 mixed.

TOD vehicle transfers are tax-free in 2028

Starting January 1, 2028, vehicles transferred by the transfer‑on‑death (TOD) process are exempt from the motor vehicle usage tax. If you receive a car by TOD, you do not owe that usage tax for the transfer.

Transfer-on-death option for vehicle titles

Beginning January 1, 2028, you can name a transfer‑on‑death (TOD) beneficiary on your vehicle title. After the owner dies, the beneficiary gets a new title by showing a death certificate, paying the transfer fee, and paying current ad valorem taxes (or electing to pay them). The transfer is subject to any lien. The TOD choice is revocable, is not changed by a will, and is not subject to the motor vehicle usage tax.

New limits and insurance for special vehicles

Street‑legal special purpose vehicles cannot be driven on interstates or other controlled‑access highways, or on local roads unless a local ordinance allows them, or where USDA forbids them. They cannot travel more than 20 miles on roads with centerline markings. Minitrucks cannot be operated as street‑legal special purpose vehicles on federally built highways. Owners or operators must carry liability insurance in the same amounts required for motorcycles.

Vehicle title and plate fees updated

Many DMV service fees are now set by the Transportation Cabinet by regulation. An added registration fee is charged at registration and split three ways: one‑third for AVIS technology, one‑third for county clerk hardware/software, and one‑third for a small‑county supplement (paid by March 1 each year to counties under 20,000 people). Examples: replacement plates cost $3 per plate plus a clerk service fee; printed paper titles cost $6 before Jan 1, 2027 (then proceeds split two‑thirds to the clerk and one‑third to the Cabinet); duplicate titles and duplicate receipts require a Cabinet‑set fee. Moving to a new county, junking a vehicle, and running out of lien space on a receipt all require Cabinet‑set clerk fees. Special license plate fees are reset (for example, some veteran plates are $17 to buy and $5 to renew; disabled plates are $12; some Gold Star plates are $0). Volunteer fire department vehicle registration fees are also set by regulation.

Stronger truck weight and route fines

Overweight fines are $0.02 per excess pound up to 5,000 pounds; above 5,000 pounds they stay $0.02 per pound but total between $100 and $500. Crossing a posted state bridge over 75 years old above the limit costs $500 for the first offense, $1,000 for the second in one year, and $2,000 for later offenses in one year if warning signs are in place. Violating the coal‑route permitting rules on designated routes is a $100 fine; running over 80,000 pounds with a permit on an undesignated route is a $1,000 fine. You cannot prepay the minimum fine for listed weight offenses; the local District Court where the offense occurred has venue. Drivers must follow directions from state‑approved weigh station bypass systems like other official traffic controls.

Special hauling permits repealed

The law repeals the statute that allowed special permits for hauling industrial and oversized loads under KRS 189.271. Carriers who used those permits must follow other rules and no longer rely on that permit authority.

Rules for rebuilt and hail-damaged cars

For hail-only damage, an insurer cannot pay more than 75% of retail value until the title is branded "Hail Damage." You pay $15 to the sheriff for each required hail inspection. The county clerk fee to enter a hail brand is set by Transportation Cabinet rule. Cars over 10 model years old are not covered by some sticker and disclosure rules. Makers cannot block installing or updating software on a rebuilt‑title vehicle.

Street-legal off-road vehicle rules

You can register a street‑legal special purpose vehicle, but it must meet safety equipment rules like lights, mirrors, horn, brakes, roll bar, seatbelts (if multi‑passenger), a speedometer, and tires with at least 2/32 inch tread. The vehicle must pass a certified inspection. You must carry liability insurance in the same amounts as motorcycles, and the clerk issues a motorcycle plate. When you renew, you certify the vehicle still meets all equipment rules.

Stronger salvage and rebuilt title rules

The law tightens how damaged cars are titled and sold. If repairs are 75% or more of value, insurers cannot pay until you surrender the title or apply for a salvage title (hail cases follow special branding rules). If a car is hail‑only damage over 75%, the title is branded “Hail Damage” after a sheriff inspection ($15) and a $3 clerk entry. A rebuilt car gets a title that says “REBUILT VEHICLE,” and you must attach a permanent metal plate warning of that status. Dealers must post a “THIS IS A REBUILT VEHICLE” sticker and get your signed notice; private sellers must disclose on the title form. If disclosure is missing, you can void the sale within 45 days after the title is issued. Insurers must apply for salvage titles for recovered stolen vehicles that meet the salvage definition, and they cannot deny or reclassify coverage just because a vehicle has a rebuilt title.

Tighter rules for liens and titles

You cannot sell or transfer a vehicle or manufactured home if the clerk is shown evidence of a lien. Lenders who take a lien must file a title lien statement within 30 days. The same payoff and discharge rules for vehicle liens now also apply to manufactured homes. For titles printed before June 27, 2025 that say “AND/OR,” clerks must treat them like “AND” titles, so all owners must sign to transfer unless a court orders otherwise.

Digital titles and electronic liens

Beginning January 1, 2027, Kentucky holds vehicle titles electronically in AVIS instead of mailing paper titles. Owners and lienholders can request a printed title and must pay the printing fee. Starting July 1, 2027, most licensed dealers and manufactured home retailers must file titles, registrations, and liens through the state’s electronic systems; dealers with fewer than 25 title applications a year are exempt. Lienholders must also file liens electronically, with possible Cabinet exemptions for lenders not normally in vehicle or home financing. The Cabinet defines acceptable lien termination statements, updates electronic lien/termination filing methods (based on perfection date), sets title and registration fees by regulation, includes manufactured homes in these rules, builds the systems by January 1, 2027, and bars dealers from issuing most plates until fees and taxes are collected.

Rules and caps for coal hauling

If you haul coal over legal weight on state roads not in the extended‑weight coal haul system, you must sign a cooperative agreement with the Department of Highways or post a bond. Roads approved for an 80,000‑pound limit by resolution do not need an agreement. Payments under agreements are capped at $5,000 per mile per year in total, have a minimum of $1,200 per vehicle for road segments over three miles, and an operator cap of $0.10 per ton per year unless you agree otherwise. Money must be spent on the covered roads. You may end the agreement; if you reported at least 50,000 tons hauled on that road, the Cabinet must immediately add the segment to the extended‑weight haul system. The Cabinet will set bonding rules by regulation.

Easier license, registration for service members

If you serve outside Kentucky, you and your spouse or dependents can add a motorcycle endorsement or renew a Class D license by mail or online. If your license expired while serving, you can renew within 90 days of return without tests and won’t be cited in that period if you show proof. If you stored your vehicle on a base while serving overseas and the registration expired, you have 30 days after return to renew without a citation when you show proof. The clerk prorates the renewal so you pay only for the months you will use the vehicle on public roads.

Salvage title from other states

Kentucky can issue a salvage title based on an original out‑of‑state junking certificate. You must submit the original secure document, two photos of the damage, and two estimates showing damage is under 75% of retail value. The title is branded SALVAGE.

Veteran mark on licenses and IDs

Eligible veterans and certain Guard/Reserve members can add “veteran” to a driver license or ID. You must show an accepted document like a DD‑214, DD‑256, DD‑257, NGB‑22, an unexpired Veteran ID/Health ID, or a Geneva Conventions ID. The Cabinet decides how the designation looks.

Longer limited CDL time for farm drivers

The state extends the allowed time length of limited CDLs for farm‑related service drivers to the federal maximum in place when this law took effect. This change takes effect immediately.

No property tax on street-legal special vehicles

Street‑legal special purpose vehicles that are registered under KRS 186.020 are exempt from state and local ad valorem taxes. This covers county, city, school, and other local taxes.

$1 from filings funds local records grants

One dollar from each listed instrument tax goes to a fund for preserving public records. Ninety percent is set aside for county clerk grants each year. If not enough county clerks apply, the department may grant the rest to other agencies.

State keeps maintaining cooperative roads

The state continues routine maintenance on roads covered by cooperative agreements. Private agreements do not remove the Transportation Cabinet’s duty to maintain those roads.

Keep plates lit and carry proof 15 days

You must keep your license plates readable and the rear plate lit when required by law. Do not use frames or covers that hide letters or decals. For 15 days after you buy or bring a vehicle into Kentucky, keep the bill of sale or assigned title in the vehicle while you apply for registration.

Email notices and fees for mail renewals

The state sends ad valorem tax and registration notices by email or text if your contact info is in AVIS, or by mail. Not getting a notice is not a defense to penalties or fees. You get a notice at least 45 days before your registration expires. If you renew by mail, you pay an extra fee: one section sets it at $2 to the clerk, and another lets the Transportation Cabinet set a separate mail‑renewal fee by regulation that the clerk keeps.

Mailing a boat renewal costs $2 extra

If you renew a motorboat registration by mail, you pay an extra $2. The county clerk receives this fee each time.

Title, lien fees and e-filing changes

Title fees are set: $9 for a certificate, $6 for a corrected or printed title, and $25 for a speed title. ATV title fees are set separately (for example, $15 for a certificate). The clerk charges $12 to note a lien and $5 to record a release on the title. The tax for lien notation must be reported and paid through the state’s AVIS electronic system.

Dealer transfer fee and FEIN rule for businesses

A business licensed by the Secretary of State must use its FEIN to title or register a vehicle or manufactured home. For vehicle transfers, the seller pays a county clerk service fee set by Transportation Cabinet rule. Licensed dealers must also pay a $2 transfer fee to the Transportation Cabinet.

Weekly remittance rules for county clerks

County clerks must report and send all money each Monday with electronic receipts. If payment is more than seven days late, a 1% per month penalty applies, unless the Cabinet grants up to a 10‑day extension. Clerks must deposit vehicle usage and sales tax receipts under KRS 131.155.

Electronic payments and clerk surcharges

County clerks can take credit cards, debit cards, e‑checks, ACH debits, and other approved electronic payments for taxes and fees. Clerks may pass through provider costs as a convenience fee, which counts as part of the taxes or fees due. If a check bounces, the clerk can place a lien on the vehicle or manufactured home for the amount of the dishonored check. Clerks may pay state agencies by ACH and face a daily penalty of 2.5% (at least $50, at most $500) for late deposits unless there is reasonable cause. The department can grant an extension if the clerk asks before the seven‑day deadline.

New registration timing and paperwork

Commercial vehicles, trailers, semitrailers, mobile homes, and RVs use an April 1 to March 31 registration year. Most light vehicles (10,000 pounds or less) renew based on the owner’s birth date; farm or business owners in this class may choose the April–March cycle. You must keep a copy of the registration receipt in most vehicles (not motorcycles) for inspection. If your vehicle has Kentucky situs and is mainly driven in Kentucky and you live out of state, you must register it using your Social Security number and out‑of‑state license number.

Simpler forms and mail renewals

The state must simplify registration, title, and tax forms and leave room for at least two dealer assignments on the title. Motorboat owners can renew by mail using state‑provided forms. If plates keep being reused, the Cabinet gives you a yearly insignia and you must attach it to drive.

Manufactured home titling, fees, and severance

Manufactured homes follow vehicle registration and proration rules. If you register any time in a month, you pay for the whole month, and you can buy extra months by twelfths. You must show a Kentucky license, Kentucky ID, or a Social Security number to register. Homes with permanent registration under KRS 186A.127 are excluded from KRS 186.020. A $98 registration fee applies where the statute says, and clerk service fees for plates and severance filings are set by Transportation Cabinet rule. For severance, the “owner” is the land’s legal title holder before the move, not the buyer of the home.

Sponsors & Cosponsors

Sponsor

Jason Howell
Republican • Senate

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 219 • No: 24

Senate vote • 4/1/2026

passed

Yes: 35 • No: 1

House vote • 4/1/2026