Understanding the Kentucky Highway Use Tax

If you are a motor carrier using public highways in Kentucky, you’re probably aware that you need to pay highway use tax in the state. The tax is required from operators of commercial vehicles that are driven on state highways.

The process for covering your due Kentucky highway use tax entails obtaining a KYU number. This is your tax license in the state that is linked to the calculation of your Kentucky Weight Distance Tax.

You also have to get a Kentucky highway use tax bond. It guarantees that your business will pay all due taxes, fees and other costs incurred from your vehicles’ use of state highways.

Here are the details you need to know about the highway use tax in Kentucky, and how you can make sure you meet all state tax rules.

What is the Kentucky highway use tax?

A number of states require payment of taxes from commercial motor carriers for using state public highways. In Kentucky, the state Transportation Cabinet regulates highway use taxes.

It is obligatory for carriers above 59,999 pounds to pay taxes for driving on state highways, even if they are not based in Kentucky. The tax is called the Kentucky weight-distance tax, as it is calculated on the basis of vehicles’ weight and the distance they have traveled.

To get your Kentucky highway use tax license, you need to apply with the Cabinet. You have to present your USDOT number, and have an active operating authority and a UCR (Unified Carrier Registration). In this way, the Kentucky authorities can verify that you are properly registered and licensed as a motor carrier.  

How to stay compliant with highway use tax requirements

Besides imposing the tax requirements, some states ensure the timely and complete payment of highway use taxes by imposing a mileage tax bond requirement. That's why motor carriers operating on state highways need to post a Kentucky highway use tax bond.

The surety bond functions as an extra layer of security for state authorities. It ensures your legal compliance and due payment of incurred highway taxes. By getting bonded, you get financial backing from a surety provider, which guarantees for you.

In case you fail to follow your obligations under the highway tax use requirements in Kentucky, you can get a bond claim up to the penal sum of your bond. This is how relevant authorities can obtain any due payments from you. Your surety covers the costs if you fail to, but you have to reimburse it afterwards. That’s why the wisest course of action is to comply with highway tax use rules and avoid claims.

How to get your Kentucky highway use tax bond

To get bonded, you need to use the official bond form of the Kentucky Transportation Cabinet. The amount of your bond is set on the basis of the number of vehicles you operate. It can be between $1,000 and $50,000 and is determined on a case-by-case basis.

You have to apply with a surety provider to start your bonding process. It will examine your financial and business situation to assess the level of risk involved in getting you bonded. Important factors are your credit score, company financials, and assets and liquidity.

The bond price is set on the basis of your financial strength and business know-how. If you qualify as a standard bonding market applicant, your bond premium is likely to be in the range of 1%-5% of the bond amount you have to post.

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