Fairfax County explores tax relief to counter spiking vehicle prices

I-66 traffic (file photo)

Fairfax County officials are looking at ways to avoid drastic jumps in tax bills for vehicle owners.

The Board of Supervisors’ Budget Committee discussed options for providing relief on the county’s annual personal property tax with county staff on Tuesday (March 15). Assessment values on vehicles have spiked, leading to a potential increase from $229 to $415 for the average bill.

While an increase in vehicle assessments last year affected 12% of vehicles, market values in the auto industry are projected to cause jumps in bills for more vehicle owners this year.

“Almost 90% of Fairfax County vehicle owners will experience a substantial increase in the assessed value of vehicles due to January 2022 JD Power values,” a staff presentation said.

One possible solution is adjusting the personal property tax rate, which is currently at $4.57 per $100 of assessed value.

Christina Jackson, the county’s chief financial officer, said the rate has not changed since fiscal year 1988, but a reduction could mean a $18 million drop in revenue associated with business personal property also covered under the tax.

The county could also adopt a different standard to assess vehicles, such as an “average” or a “rough” trade-in price.

The county currently uses J.D. Power values for a vehicle’s “clean trade-in” book value, which the company describes as “a vehicle with no mechanical defects and [that] passes all necessary inspections with ease.”

But staff recommended applying an 85% assessmention ratio to vehicles, which would bring the average increase to $78, or a bill of $307 for the year. That reduction would make the average assessment $13,314, rather than $15,663 if no help is given.

The county board hopes to get more info on the matter before deciding how to proceed as they evaluate the proposed budget for fiscal year 2023, which starts July 1.

“The prices are just outrageous,” Lee District Supervisor Rodney Lusk said. “Clearly, we have to do something.”

Meanwhile, the Commonwealth subsidizes part of the taxes on personal vehicles through the Personal Property Tax Relief Act. The state has been giving Fairfax County $211 million per year from that money, but the amount has stayed the same for over a decade.

Board of Supervisors Chairman Jeff McKay said the state has promised to eliminate car taxes.

Personal property taxes for Fairfax County are slated to generate $734 million for the upcoming budget year. Most of the county government’s revenue comes from real estate taxes.