"Car Tax" Relief
Does my car qualify for "Car Tax" Relief?
To qualify for "Car Tax" relief, a vehicle must be owned or leased by an individual, have a registered gross weight of less than 7,501 pounds, and NOT be used for business purposes.
- Effective January 2017 pickups and panel trucks with a gross weight between 7,501 to 10,000 lbs and designated as personal use will qualify for the state Car Tax subsidy (PPTRA). To qualify, these trucks must register with the Virginia DMV as a "pickup". DMV will continue to use the registration designation of "truck" for business use vehicles of this type which will not qualify for the state Car Tax subsidy.
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 approximately 60.5% of the bill, and the taxpayer pays the remaining 39.5%. These rates are subject to change annually. The taxpayer must pay the full amount of 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 has capped the local subsidies to a fixed amount to be distributed among qualifying vehicles in each jurisdiction.
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.