Car Tax Relief Planned In Fairfax County For Second Year

FAIRFAX COUNTY, VA — With average car values still above normal levels, car owners in Fairfax County can expect to see local tax relief on their bills for a second year.

As part of the budget mark-up, the Board of Supervisors indicated they would adopt 10 percent tax relief on the personal property tax on vehicles. That means vehicles will be assessed at 90 percent rather than the 100 percent normally used for tax bills.

The county estimated the average tax bill will go down $68 from last year. The change applies to the tax bills that will be mailed in July and are typically due in early October.

"Our Board recognizes that our residents are feeling the stress of the rising cost of living brought on by a host of issues including nationwide inflation and rising assessments of real estate and vehicles," said Board of Supervisors Chairman Jeff McKay in a statement. "The FY 2024 budget provides 10 percent [relief] in personal property taxes, which will result in car tax bills being held steady or even lowering in some cases."

Car values normally depreciate, which means car owners usually see their personal property tax on cars go down from year to year. But car values trended up during the COVID-19 pandemic due to higher nationwide used car demand with limited supply. New car supplies have been impacted by supply chain shortages on key parts like chips, resulting in used cars getting more demand.

That trend is starting to turn around, as Fairfax County says 97 percent of vehicles saw values decline or remain the same in the 2023 tax year. On average, values dropped 9.8 percent. However, those values are still above pre-pandemic values of cars before used car demand spiked.

Cars were assessed at an 85 percent ratio for tax bills last year. But because of the rising car values, Fairfax County car tax bills increased by 33 percent on average. Increases were even steeper for the most popular models of cars.

Car values for Fairfax County tax bills come from the National Automobile Dealers Association pricing guide published by J.D. Power as of Jan. 1. The tax rate remains the same at $4.57 per $100 of assessed value.

McKay said the county will continue to push for an increased share of personal property tax relief. The Personal Property Tax Relief Act of 1998 covers a percentage of the taxes on the first $20,000 of assessed value, but McKay said the share of tax relief from the state hasn't increased since 2007. Cars owners whose car values are $1,000 or less do not owe taxes with the state relief funds applied.

Seniors and people with disabilities can receive additional car tax relief if they meet income and asset eligibility requirements.

Car owners can also appeal their assessment value on the tax bill if it has high mileage, body damage or serious mechanical defects as of Jan 1.

Along with car tax relief, the county's budget will reduce the real estate tax rate from $1.11 per $100 of assessed value to $1.095 per $100 of assessed value. Even with the lower rate, the average real estate tax bill would increase by $412 due to increasing home values.

The budget mark-up was the last step before the Board of Supervisors approves the final budget next Tuesday. The budget typically doesn't change between mark-up and final approval.

SEE ALSO: Fairfax County Budget Mark-Up Includes Lower Real Estate Tax Rate