Car Tax Relief Outlined For Upcoming Alexandria Tax Bills

ALEXANDRIA, VA — Amid major considerations like the Duke Street bus lanes recommendation at Tuesday's Alexandria City Council meeting, adjusted car tax relief will be another item subject to approval.

The state partially provides relief to lower car tax bills charged by localities in Northern Virginia through the Personal Property Tax Relief Act of 1998. But since the city's allocation of about $23.6 million hasn't changed since 2006, the percentage of relief applied to tax bills can go down due to more registered cars and higher car values.

The city previously increased the threshold for 100 percent tax relief from cars valued at or below $1,000 to $5,000. That means vehicle owners whose cars are valued at $5,000 or below do not get charged car tax as relief funds cover the bill completely. According to the city, about 30 percent of vehicles in the city qualify for 100 percent tax relief.

For the 2023 tax year, the city is proposing the 52 percent relief stay the same for vehicles valued between $5,001 and $20,000. For vehicles valued $20,001 and $25,000 the share of tax relief on the first $20,000 of value would decrease from 28 percent to 27 percent.

For vehicles at $25,000 or higher, the percentage of tax relief on the first $20,000 of value would drop from 16 percent to 14 percent.

According to the city, relief percentages could change slightly once car tax assessments are completed in July. Tax bills will go out later in the summer and be due Oct. 5.

Car owners whose vehicles are registered in the City of Alexandria typically pay the car tax each year by early October at a rate of $5.33 per $100 of assessed value.

For the 2023 tax year, vehicles will be assessed at 90 percent of value to account for vehicle values increasing due to pandemic-related supply issues. That means a vehicle's actual market value will be discounted by 10 percent for car tax bills. The assessment ratio was set in the city budget approved by City Council in May.