Car Tax Relief

Per the guidelines of the state's Personal Property Tax Relief Act, a vehicle (automobile, motorcycle or truck) is eligible for tax relief if predominantly used for non-business purposes and owned or leased by an individual who is responsible for the payment of personal property tax.

A vehicle (automobile, motorcycle or truck) is ineligible for tax relief if any of the following apply: (1) More than 50% of the mileage for the year is for business purposes and is deducted for federal income tax purposes or reimbursed by an employer; (2) More than 50% of the depreciation associated with the vehicle is deducted as a business expense; (3) The cost of the vehicle is expensed pursuant to Section 179 of the Internal Revenue Service Code; (4) The vehicle is leased by an individual but the leasing company pays the personal property taxes by contractual agreement; (5) The gross weight exceeds 7,500 lbs.

The 2004 General Assembly voted to cap the Commonwealth's car tax relief at $950 million beginning in 2006. Each locality's share of the $950 million is determined by the amount of its tax year 2005 reimbursement from the Commonwealth. The amount of car tax relief on each qualifying vehicle is based upon the total reimbursements received divided by the total tax projected on all qualifying vehicles. For 2012, the car tax relief percentage has been calculated at 60%. The car tax credit applies to the first $20,000 value of a qualifying vehicle and applies to the tax amount only. If a vehicle's assessed value is $1,000 or less, the owner will not owe any Personal Property Taxes.