Does my car qualify for "Car Tax" Relief?

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 Car 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?

"I thought the Car Tax was going away. Why do I still have to pay?"

Under Virginia law -- the Personal Property Tax Relief Act of 1998 (PPTRA, also known as the "No Car Tax" legislation) -- the State planned to subsidize 100% of the taxes on personal use vehicle assessments below $20,000 by the year 2002. In passing this law, the State effectively pledged state revenue to pay local governments throughout the Commonwealth a subsidy in lieu of personal property taxes that local governments would have otherwise collected directly from taxpayers. At present, the State pays 67% of the bill, and the taxpayer pays the remaining 33%. The taxpayer must pay all taxes on any vehicle assessment that exceeds $20,000. Only personal use vehicles qualify for PPTRA.

The law always had a stipulation that if the growth in state revenue did not reach certain levels, the amount of state subsidy would be frozen at the current level. Because of the slowdown in state revenue, the State had to freeze the car tax subsidies at the 70% level. Based on the law, the growth in state revenue has not been sufficient this year to allow the subsidy rate to climb to 100%.

For more information, review the Personal Property Tax Relief Act of 1998 fact sheet, or contact the Department of Tax Administration at 703-222-8234.