Alexandria Car Tax Bills May Increase For Some Despite Lower Assessment Ratio

ALEXANDRIA, VA — City of Alexandria residents are starting to receive car tax bills, and some may see higher tax bills due to economic factors affecting car values.

Because car values normally depreciate, a car tax bill from the city typically falls year by year for the same vehicle. That's not the case this year as nationwide used car demand with limited supply has contributed to increasing car values. Car production has been impacted by supply chain shortages on key parts like chips, resulting in a limited supply of vehicles and car values increasing across the U.S.

In Alexandria, the city's personal property tax rate on vehicles remains the same at $5.33 per $100 of assessed value, but increased car values can contribute to a higher car tax bill. The fiscal year 2023 budget adopted by City Council in May has some changes to the car tax in response to increased car values. Although the tax rate remains unchanged, the city will use a 78.8 percent assessment ratio rather than the full 100 percent of a vehicle's value for the 2022 tax year.

The city's car tax is calculated based on the National Automobile Dealers Association's January values for used vehicles and the city's $5.33 per $100 of assessed value tax rate. With the new assessment ratio, the city will apply a 21.2 percent discount before calculating the car tax due. State car relief funds are also applied depending on the car's value.

Even with a lower assessment ratio, some car owners may still get a higher tax bill. During the budget process, a budget memo from City Manager James Parajon indicated car values will go up by an average 26 percent for approximately 87 percent of car owners in Alexandria.

"Vehicle owners could still see an increase on their specific vehicles compared with last year, as the change in market value varies widely by vehicle model and year," a city news release states. "Both the original market value and the reduced assessed value are shown on this year’s tax bills."

City Council also opted to use state car tax relief funds to provide 100 percent car tax relief for vehicles assessed at $5,000 and under. That 100 percent relief previously applied to vehicles assessed at $1,000 and below. The city estimates nearly 32,000 vehicles will not owe car tax in the 2022 tax year.

For vehicles assessed between $5,001 and $20,000, 52 percent relief will be applied. For vehicles between $20,001 and $25,000, relief will be applied at 28 percent on the first $20,000 of assessed value. For vehicles above $25,000, 16 percent relief will be applied on the first $20,000 of value.

Car tax payments are due by Oct. 5. Car tax payments may be made online, by mail to City of Alexandria, P.O. Box 34710, Alexandria, VA 22334-0710, to a 24-7 secure drop box on the Royal Street side of City Hall, or in person at the Treasury Division at City Hall, Room 1510, Monday through Friday from 8 a.m. to 5 p.m.

For more information, visit www.alexandriava.gov/CarTax.