IW proposes restoring $4.50 car tax rate

Published 6:36 pm Friday, February 10, 2023

Now that last year’s inflated vehicle values have for the most part decreased, Isle of Wight County is proposing to raise its car tax back to the 2021 rate.

County supervisors voted to reduce the rate 13% in 2022 from $4.50 per $100 in assessed value to $3.90 per $100 in an effort to provide temporary relief to taxpayers amid a surge in used-car prices. 

The value of a 2015 Lexus ES, for example, had risen from $15,875 in 2021 to $19,575 in 2022, but has since fallen below the 2021 price to $15,250 as of January, according to Gerald Gwaltney, Isle of Wight County’s commissioner of the revenue.

The decline in travel over the past two years of the COVID-19 pandemic created a shortage last year in the number of used vehicles reentering the market, since there was less need to replace them, Gwaltney told supervisors in 2022. This, coupled with a shortage of computer chips needed to run newer cars and a surge in COVID-19 cases among automotive manufacturing workers, had driven up vehicle values.

Now, “the market is adjusting,” Gwaltney told supervisors on Feb. 2.

Even with the lowered tax rate, Isle of Wight expects to take in $13.5 million in car tax revenues by June 30, a 22.7% increase over the $11 million budgeted for 2022. To maintain the expected $13.5 million amid a roughly 18% drop in vehicle values from the 2022 highs, Isle of Wight will need to raise its car tax rate back to $4.50, Gwaltney and County Administrator Randy Keaton contend.

Not all vehicle values have returned to normal. A 2018 Chevrolet Silverado truck was valued at $23,900 in 2021 and shot up 53% to $36,575 in 2022. It remained valued at $36,575 as of January, Gwaltney said.

But of the roughly 32,000 registered vehicles on the county’s tax books, around 1,200, or 3.75%, saw an increase in value over 2022. The remaining 96.25% of drivers should see their bills return to what they paid in 2021, if not lower.

The supervisors are planning a Feb. 23 public hearing on the proposed restoration of the $4.50 tax rate. If the change is adopted, semiannual bills for the first 50% payment calculated using the new rate and 2023 valuations will be mailed in April and due June 5. A second mailing for the remaining 50% would occur in the fall and be due Dec. 5.

Drivers of vehicles with high mileage may be eligible for a deduction in the amount of car tax owed. To qualify, the driver must submit the most recent state inspection or official paperwork from any automotive dealership or repair business that shows the odometer reading at the time of service, the county’s website states. The commissioner’s office then checks the mileage against an assessment guide by J.D. Power, a data-gathering company for the automotive industry.