The Virginia General Assembly passed the Personal Property Tax Relief Act (PPTRA) in 1998. Code of Virginia Section 58.1-3523 et. seq. provides relief of personal property taxes.
Three requirements must be met to qualify for tax relief. The vehicle must be:
- a passenger car, pickup or panel truck, or a motorcycle
- owned by a natural person or leased by a natural person under a contract requiring such person to pay the personal property tax
- used for nonbusiness purposes
Definitions of Motor Vehicles Qualifying for Tax Relief:
- PASSENGER CAR - 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 (effective July 1, 2016) - Every motor vehicle registered for personal use, designed to transport property on its own structure independent of any other vehicle, and having a registered gross weight in excess of 7,500 pounds but not in excess of 10,000 pounds.
- MOTORCYCLE - every motor vehicle designed to travel on not more than three wheels in contact with the ground, except any vehicle included with the term "farm tractor" or "moped" as defined in Code of Virginia Section 46.2-100.
A vehicle is considered used for business purposes if:
- More than 50% of the mileage for the year is used as a business expense for federal income tax purposes OR reimbursed by an employer
- More than 50% of the depreciation associated with the vehicle is deducted as a business expense for federal income tax purposes
- The cost of the vehicle is expensed pursuant to § 179 of the Internal Revenue Code
- The vehicle is leased by an individual and the leasing company pays the tax without reimbursement from the individual
Since 2006, the Commonwealth has and continues to appropriate $950 million each tax year to reimburse localities statewide. City of Charlottesville City Council sets the tax relief percentage each year. Tax bills are reduced by Charlottesville’s expected reimbursement under the Personal Property Tax Relief Act from the Commonwealth, for qualified vehicles based on the first $20,000 of value. Most recent tax relief rates are as follows:
- 2017 - 47%
- 2018 - 44%
- 2019 - 43%
- 2020 - 42%
- 2021 - 40%
- 2022 - 32%
- 2023 - 33%
If a qualifying vehicle’s assessed value is $1,000 or less, the tax is eliminated and the Commonwealth’s share is 100%. The City of Charlottesville is required annually to certify and verify a vehicle as qualified to receive car tax relief. Citizens are obligated to thoroughly review information detailed on their tax bills to ensure their vehicles are properly qualified. If a vehicle is improperly qualified or there is uncertainty whether a vehicle is eligible for car tax relief because of its part- time use for business purposes, contact the City of Charlottesville Commissioner of the Revenue. A personal property tax payment submitted to the City of Charlottesville is considered an acknowledgement that the vehicle has been qualified correctly.
NOTE: Personal Property Tax Relief compliance guidelines require that we audit Virginia Schedule C, Schedule FED/CG attachments of your Income Tax return. If a review of these schedules show that you declared vehicle mileage over 50% business use, the vehicle would not qualify for the Personal Property Tax Relief that it was previously given and the PPTR will be disqualified. The disqualification results in a supplemental assessment of the tax, late payment penalty and interest based on what would have been the original due date of the respective tax year. Statute of limitations provide that the disqualification of the PPTR and supplemental assessments are to cover the current and up to three prior tax years, if the vehicle was owned and declared as business use to the Internal Revenue Service.