Personal Property Tax Assessments
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, all cities and counties levy personal property taxes. In Arlington County, this tax is applied to all motor vehicles regularly parked overnight in the county, such as cars, trucks, motorcycles, motorhomes, boats and more. In 2020, the county board set a tax rate of $5 per $100 of assessed value, with your vehicle's value being the "Clean Loan" value in the latest edition of the used car guide published by the National Automobile Dealer's Association (NADA). The assessor also takes into account the number of months your vehicle was located in Arlington County and whether or not it qualifies for tax relief provided by the Commonwealth of Virginia.
So how much could these taxes be? Let's say your family owns a sports utility vehicle and an all-terrain vehicle. The tax assessor finds that the value of your SUV is $10,650 and your ATV is worth $1,573. 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 $5 = $532.50
ATV: $1,573 ÷ $100 = $15.73; $15.73 x $5 = $78.65
Total Personal Property Tax: $611.15
Your family has to pay more than $600 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 taxes apply mostly to business-related items, both the county and the town tax businesses. That means if a business bought some furniture, it would pay personal property taxes on it once to the town, and then again to the county. Since there is no blue book covering office furniture, machinery, tools, etc., assessments are based on the item's 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 touch, such as stocks, bonds and patents. Few states tax intangible assets on their personal property taxes. Most tax personal vehicles or business assets.