Q. Why have personal property taxes changed?
A. The state never fulfilled its promise to eliminate the personal property tax. State funding is now capped. - The Virginia General Assembly changed the way the personal property tax subsidy is distributed. Starting with tax year 2006, each jurisdiction in Virginia receives a fixed amount for personal property tax relief, regardless of the number or value of the cars registered in that jurisdiction.
- It is up to each jurisdiction to decide how to distribute its portion of the tax relief to eligible vehicles. State relief is still only applied to the first $20,000 in annual assessed value.
- Arlington’s fixed share of the tax relief money each year is approximately $31.3 million. This represents 3.29% of the total statewide tax relief.
- With the adoption of the FY 2007 budget in April 2006, Arlington changed its personal property tax rate from $4.40 per $100 of assessed value to $5.00 per $100 of assessed value – the first rate increase in more than 20 years. The action was taken after a public hearing.
- The effective tax rate is still lower than that of neighboring jurisdictions such as Falls Church, Fairfax and Alexandria. The increased revenues will be used to support competitive public safety pay and real estate tax relief.
- The County adopted a progressive tax plan that ensures that cars with the lowest value pay nothing. Arlington exempts the tax due on the first $3,000 of value for every qualifying vehicle – while neighboring jurisdictions exempt the first $1,000. Arlington’s method of distributing the state funds gives 100 percent tax relief to about 34 percent of all vehicles registered in Arlington. More than 88 percent of all cars registered in the County will pay less than 50 percent of their tax liability because of the state money provided and the method of distribution adopted by the Board.
Q. What does the revenue increase fund?
A. Critical public safety needs, and increase real estate tax relief. - Real Estate property tax and personal property tax, the two most significant sources of revenue available to local jurisdictions, are the only taxes without a State-mandated limits on the rates local jurisdictions may set. The personal property tax rate increase funds crucial compensation needs in public safety, allowing Arlington to compete effectively with other jurisdictions to hire and retain police officers, sheriffs and firefighters. The increase also made it possible for the County to provide additional real estate tax relief to homeowners and commercial properties, by allowing a deeper cut in the real estate tax rate.
Q. Why did the Board raise the needed funds through the personal property tax?
A. To share the costs more fairly. - Personal property tax had not been raised in over 20 years.
- The other main tax source is the real estate tax, where values have been increasing on homeowners more than other real estate owners. The personal property tax spreads the cost to renters and commercial taxpayers.
Q. How does Arlington’s personal property tax rate compare with those of nearby jurisdictions?
A. It is comparable to those of nearby jurisdictions. - Due to Arlington’s method of vehicle assessment, automobiles in Arlington are valued approximately 10% less than in surrounding jurisdictions (except Loudon County).
- Arlington’s effective tax rate is lower than our closest neighbors in Alexandria, Falls Church and Fairfax.
- Local governments were given wide latitude in choosing how to allocate the state subsidy.
- Other northern Virginia jurisdictions exempt the first $1,000 in value from personal property tax, then use a fixed percentage for all qualifying vehicles. (The percentage used varies by jurisdiction).
- Arlington chose to exempt the first $3,000 in value for all cars, and apply a progressive rate to those of higher value.
Q. Why does the state subsidy end at $20,000 in value?
A. This is not a new requirement. It continues the State’s practice of requiring that none of the block grant funds be applied to vehicle value above $20,000. Q. What is the formula Arlington uses to determine the tax rate? - Arlington uses the State tax relief money to exempt the first $3,000 in value of every car subject to personal property tax.
- If the vehicle's assessed value is $20,000, the the tax on the first $3,000 of value is 100% covered by the State relief money. In 2011, the tax on the next $17,000 ($3,001 to $20,000) of assessed value is subsidized at 32% by State relief money. The amount of tax relieved for each vehicle by the state subsidy changes each year depending on the number of vehicles registered in the County and values of the vehicles.
- Virginia law requires that the vehicle’s owner be responsible for the entire tax on any assessed value over $20,000.
Q. Is there someone who can provide me with more details on the personal property tax?
A. Yes. Please call the Taxpayer Hotline: 703-228-4000. More information on personal property tax may also be found by clicking here. Oct. 25, 2011. |
