Most states that tax personal property use a tax assessor to decide how much tax a person or business should pay. A tax assessor is a public official who determines the true value of an item. This true value is an amount that the average, unbiased buyer would pay for the item. Many states and their tax assessors use a blue book value to figure out the rate for various vehicles and equipment. The blue book value is what a vehicle dealer would pay to buy the item.
In Virginia, the tax assessor uses the National Automobile Dealers Association (NADA) Blue Book value for cars, trucks, motorcycles and utility trailers. Recreational vehicles are determined based on the NADA Recreational Appraisal Guide [Source: Office of the Treasurer]. Vehicles have the most expensive personal property tax rates, at $4.25 per $100. Pleasure boats are the least expensively taxed, at $0.50 per $100.
Let's say you really like to be outdoors and travel across the country. Your family owns a sports utility vehicle, an all-terrain vehicle, a recreational vehicle and a boat. The tax assessor finds that the blue book value of your SUV is $10,650. Your ATV is worth $1,573, and your RV motor home is worth $26,845. Meanwhile, your fishing boat retails for $9,755. You have quite a few personal property taxes to pay!
To find the amount of taxes due, divide the assessed value by $100, and then multiply the result by the tax rate.
SUV: $10,650÷$100 = $106.50; $106.50 x $4.25 = $452.63
ATV: ÷$100 = $15.73; $15.73 x $.4.25 = $66.85
Recreational vehicles: $1.50 per $100
RV: $26,845 ÷ $100 = $268.45; $268.45 x $1.50 = $402.68
Pleasure boats: $0.50 per $100
Boat: $9,755 ÷ $100 = $97.55; $97.55 x $0.50 = $48.78
Total Personal Property Tax: $970.94
Your family has to pay almost $1,000 each year in personal property taxes for your vehicles. If you live in a state with personal property tax, consider the long-term cost when you buy a vehicle.
Many states' personal property taxes apply only to business expenses. In those cases, your personal vehicles would be exempt from paying taxes. If you owned a business, you could have to pay personal property taxes on furniture, fixtures, equipment, inventory, libraries and supplies. In Maryland, where personal property tax applies mostly to business-related items, both the county and the town would tax a business [Source: Department of Assessments and Taxation]. That means if a business bought some furniture, it would pay personal property taxes on them once to the town, and then again to the county. Items such as office furniture that don't have a blue book to decide value are assessed based on original cost minus depreciation for age.
Some states also tax intangible assets under their personal property tax. Intangible assets are goods and items you can't actually own or touch. These would include stocks, bonds or patents, for example. Few states tax intangible assets on their personal property taxes. Most tax personal vehicles or business assets.
Read on to learn what can change your personal property tax bills.