State Car Tax Relief Falls to 43 percent for Loudouners

Remember when Gov. Jim Gilmore promised to eliminate the car tax? This year, the state government will fall 57 percent short of keeping that promise.

The Loudoun County Board of Supervisors this week agreed to hold the personal property tax rate—unchanged for more than 30 years—at $4.20 per $100 of value. Personal use vehicles valued at $1,000 or less are exempt from the tax. State tax relief is offered on the first $840 of a resident’s car tax bill—the amount due for a vehicle valued at $20,000. The concept in 1998 was that the state government would eliminate that tax by paying localities that money instead. Those with more expensive cars would pay the rest of their balance.

The program was never fully funded, however. The assembly initially agreed to honor Gilmore’s promise with funding for localities phased in over five years. In 2004, the assembly abandoned that plan and froze the reimbursements at 70 percent—giving localities the option of whether to waive the remaining 30 percent or require car owners to pony up. Loudoun, like most counties, opted for the latter. The program took another hit in 2006 when the assembly capped statewide funding for the tax-relief program $950 million annually. Of that, Loudoun receives $48,070,701, an amount unchanged since then.

That approach hits hardest the residents in fast-growing localities. As the number of vehicles increases, the share of tax relief afforded each vehicle decreases. The vehicle tax base has increased 59 percent since 2005. Last year, the state funds covered about 46 percent of the taxes charged on a $20,000 vehicle; this year that will drop to 43 percent, a maximum of $361.

The Board of Supervisors, so far unsuccessfully, has pushed for a statewide study of all local government allocations provided through the tax relief program.


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