Unlike most other states, Kentucky doesn’t provide any relief from the onerous business tangible personal property (TPP) tax on heavy equipment rentals. As indicated on the map below, nearly all other states in the region have enacted reforms to their onerous business TPP tax systems. Some do not impose a TPP tax at all (Illinois and Ohio); some exempt heavy equipment rental property as inventory or a special class of property (Missouri, Tennessee, and Wisconsin); several exempt rental property from property tax and replace it with an industry-supported alternative tax or recovery fee (Indiana, Maryland, North Carolina, South Carolina, and Virginia); and some classify heavy equipment as inventory and provide an income tax credit against the annual income tax for local property tax paid (Louisiana and Mississippi).
To make Kentucky more competitive, it should treat mobile heavy equipment rental property (that is ultimately sold at retail) as inventory for state and local property tax purposes, and authorize a local recovery fee that can be used to pay the existing personal property tax. This will allow rental companies operating in Kentucky and employing Kentucky residents to better compete with out-of-state rental companies that ship into the state and pay no taxes.

Click map to enlarge.

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