Tax relief will continue for the residents of Buchanan after Town Council unanimously approved either an elimination or steep reduction on vehicle taxation under the Personal Property Tax Relief Act for the second year.
During council’s Sept. 14 meeting, members discussed the positive economic impact the tax relief will have on the 1,200 residents of the town, noting how hard the pandemic hit the tourism and retail sectors, drivers of the town’s economy.
“Council was very acceptable to helping people, especially with COVID-19 people are being furloughed or unemployed,” said Town Manager Jason Tyree, who estimated personal property taxes add about $11,000 to Buchanan’s coffers.
The adopted Personal Property Tax Relief Act for 2020 will:
• Eliminate personal property taxes on personal use vehicles up to $1,000
• Vehicles valued between $1,001 -$20,000 will be eligible for 100 percent tax relief during the 2020 tax year
• Vehicles valued at $20,001 or more will only receive tax relief only on the first $20,000 of value.
Tyree explained the relief comes from the state, but it is up to local governments to determine the amount of relief. Neither Troutville nor Fincastle have a personal property tax. Botetourt County’s personal property tax is $2.71 cents per $100, according to the Commissioner of Revenue’s Office.
“I don’t know many counties that are paying out 100 percent,” Tyree said, adding most municipalities keep a portion for their coffers.
The relief came about decades ago. In 2004 and 2005, due to the cost of personal property tax relief, the General Assembly changed the funding formula used to provide car tax relief. For tax years 2001 through 2005, the state’s share for qualifying vehicles was 70 percent. In 1998, when the program began, the state’s share of personal property taxes was 12.5 percent.
Localities now receive a fixed, lump sum block payment that will not change regardless of the increased value or volume of vehicles added since the formula was developed, based on 2004 factors. As the result, the state will pay less of a share each year as the number and value of vehicles continues to grow. The new funding formula, effective for tax year 2006, requires a calculation each year to determine the share of personal property taxes to be paid by the property owner, based on the declining percentage of share funded by the state, reads the Botetourt County Treasurer’s Office website.