During the 2005 session, the Virginia General Assembly passed legislation that was signed into law creating a plan that allows the County to reduce the personal property taxes paid by individuals on certain motor vehicles. The current law differs from that which had been in place since 1998. The new law provides a limited amount of relief.
The tax relief does not eliminate the personal property tax. It does, however, provide for a partial reduction in the local Personal Property Tax. The reduction percentage is a function of the growth and value of the vehicle tax base and will be determined annually. It will apply to the first $20,000 of assessed value on qualifying vehicles. Taxpayers who own qualifying vehicles with a value of $1,000 or less are not taxed. Taxes on the value in excess of $20,000 are paid to the County and not subject to the reduction. The reduction will appear on the County’s tax bill.
Vehicles Qualifying for Tax Relief
A vehicle must meet all three of the requirements below to qualify for tax relief. The vehicle must:
- Be a passenger car, pickup or panel truck weighing less than 7,501 pounds, or motorcycle; AND
- Be owned by a natural person OR leased by a natural person under a contract requiring such person to pay the tangible personal property tax OR be held in a private trust for an individual beneficiary; AND
- Be used 50% or less for business purposes.
Vehicles Which Do Not Qualify for Tax Relief
- Motor homes do not qualify for tax relief because they are designed primarily for use as living quarters as opposed to being designed for transportation purposes.
- Vehicles held in a living trust will not qualify for tax relief because these vehicles are owned by a trust, not by a natural person.
- Farm use vehicles
- Passenger car means every motor vehicle other than a motorcycle designed and used primarily for the transportation of no more than ten persons including the driver.
- Pickup or panel truck means every motor vehicle designed for the transportation of property and having a registered gross weight under 7,501 pounds.
- Motorcycle means every motor vehicle designed to travel on not more than three wheels in contact with the ground, except any vehicle included within the term ‘farm tractor’ or ‘moped’.
In order to comply with the Personal Property Tax Relief Act, it is very important for taxpayers to report the use of their vehicle each year to the Commissioner of the Revenue’s Office.
If you can answer “Yes” to any of the following questions, your motor vehicle is considered by State law to have a business use and does NOT qualify for Tax Relief.
- Is more than 50% of the mileage for the year used as a business expense for Federal Income Tax purposes OR reimbursed by an employer?
- Is more than 50% of the depreciation associated with the vehicle deducted as a business expense for Federal Income Tax purposes?
- Is the cost of the vehicle expensed pursuant to Section 179 of the Internal Revenue Service Code?
- Is the vehicle leased by an individual and the leasing company pays the tax without reimbursement from the individual?
- Is the vehicle farm use?
- Is the vehicle a motor home?
- If the vehicle is a truck, does the registered gross weight exceed 7,500 pounds?