Virginia Beach will tamp down car tax and provide relief to seniors, new businesses

Car values are skyrocketing, but the annual tax that residents pay for owning a vehicle in Virginia Beach will stay at a reasonable level, according to the city.

The City Council approved several measures Tuesday that will ease the tax burden on residents and new businesses, including tamping down the effects of rising car assessments.

Virginia Beach has a budget surplus from last year, and council members had been exploring ways to give taxpayers a break.

Virginia is one of more than two dozen states that allows cities to collect an annual car tax. In Virginia Beach, 400,000 cars and trucks are subject to the tax, according to Commissioner of the Revenue Phil Kellam.

Councilman John Moss originally wanted to provide residents with a credit of $20 to $40 per vehicle. But after consulting with city staff, he withdrew that idea this week, because all vehicles would not have qualified.

Moss instead supported a tax reduction plan introduced by Kellam, who told council recently that the fair market value of cars and trucks is distorted due to supply chain issues for new vehicles.

Kellam’s plan will reduce the assessments on cars and trucks by 25% for the 2022 tax year. Residents’ personal property tax will be assessed at 75% of its fair market value rather than 100%. The City Council approved it.

“All these used cars went up, when they normally went down,” Kellam said. “We’re working hard to keep the taxpayer from being hit by this distorted value.”

The new formula will keep tax bills near last year’s level, and some people with used cars that are depreciating will owe less than in 2021.

The same formula was applied in Hampton, and Chesapeake has a similar reduction, Kellam said.

Personal property tax bills will arrive in early May and are due June 5. Appeals can submitted at vbgov.com/com.

The council also approved eliminating personal property taxes for seniors and residents with disabilities who meet certain asset and income qualifications — there are 918 — saving each person an average of $143 annually.

The business property tax for new companies also will be suspended for two years. The measure will save 164 new businesses an average of $1,619 a year.

Stacy Parker, 757-222-5125, stacy.parker@pilotonline.com