Senate Bill No. 1445 allows municipalities to adopt ordinances that exempt motor vehicles from property taxation, a significant change from current law. This exemption can be phased in over a period of up to five years, during which municipalities may increase the assessment ratio for other property types (real property and non-vehicle personal property) to offset the revenue loss from the motor vehicle exemption. The bill stipulates that municipalities must notify the Office of Policy and Management (OPM) within 30 days of adopting such an ordinance, providing details about the assessment year and the selected property tax assessment rates. Additionally, the OPM is required to submit an annual report to the legislature starting January 1, 2027, detailing the municipalities that have adopted the exemption and other relevant information.

The bill also makes a conforming change to the existing law regarding the uniform assessment ratio, which is generally set at 70% for all property types. Under the new provisions, this uniform rate will not apply to municipalities that choose to exempt motor vehicles from property taxation. The bill is set to take effect on October 1, 2025, and it aims to provide municipalities with greater flexibility in managing their property tax structures while addressing potential revenue impacts.