Car Tax Reform

The Virginia General Assembly implemented the current car tax relief program in 2006. In that year the Commonwealth of Virginia established a fixed amount to be paid to all localities for tax relief. The proceeds from this reimbursement must be used to provide tax relief to the owners of qualifying vehicles. Since the amount received by the City is the same each year, the percentage of relief citizens receive will vary from year to year based on the number of vehicles assessed and their valuation.

Does Your Car Qualify?

Qualifications for car tax relief are set by the State of Virginia in State Code 58.1-3523-3524. Following is a list of items that do not qualify for tax relief:

  • Trailers, motor homes, boats, and other recreational vehicles
  • Vehicles owned by business entities
  • Vehicles that are claimed for income tax purposes for more than 50% depreciation as a business expense
  • Vehicles that are claimed for income tax purposes for more than 50% mileage for the year as a business expense
  • Vehicles that have their expenses reimbursed by an employer
  • Vehicles leased to an individual when the leasing company pays the tax without reimbursement from the individual

Relief is applied to the first $20,000 worth of assessed value on qualifying vehicles. Vehicles whose annual assessment exceeds $20,000 will pay full tax on the tax assessment portion which is over the threshold.

  • Current 2023 taxpayer percentage:56%
  • Current 2023 State percentage:44%