By Callie Hietala
Taxpayers in Martinsville may have noticed an increase in their personal property taxes this year.
Bills were recently mailed out to city residents, “and we’ve been fielding calls ever since,” said the city’s Commissioner of Revenue Ruth Easley.
The higher bill is due to an increase in the assessed value of vehicles, and not to an increase in the city’s tax rate, which has remained steady at $2.30 per $100 of assessed value for last 15 years or so, she said. Easley explained the situation during a recent meeting of the Martinsville City Council.
According to Easley, vehicle value assessments were higher this year due to an increase in value for both new and used cars. She said that new car prices increased 6 percent over 2020, while the average prices for used cars went up 14 percent, rising 10 percent just in the summer of 2020.
“Historically,” she said, “we see used car prices depreciate year over year and month to month.” However, several factors contributed to the increased value that served as the basis for this year’s tax bill.
During the early months of the COVID-19 pandemic, many auto industry manufacturers pivoted from manufacturing cars to producing ventilators and personal protective equipment (PPE) which, Easley explained, created a shortage in new car inventory.
Additionally, many people used COVID-19 stimulus money to purchase new vehicles including cars, trucks, boats, and RVs. Increased demand, coupled with a shortage of new car inventory, caused prices to go up.
By January 1, 2021 (the evaluation date used by both Martinsville and Henry County for personal property tax assessments), vehicle values had increased over their 2020 values, particularly with pickup trucks and sports cars, which actually appreciated rather than seeing the normal depreciation expected in a typical year.
Another factor that played into these increased values, Easley said, was large fleet companies such as rental car companies not replacing their vehicles as they normally do, decreasing the number of used vehicles on the market.
Ultimately, the low supply and high demand for vehicles increased vehicle values and reduced the amount of tax relief each taxpayer received. The tax relief credit is a set dollar amount provided by the state which is divided by the total tax of all qualifying vehicles in the city.
“When the values go up like they did, it lowered your personal property tax relief percentage that you got,” Easley said. “Not only did the value of the vehicles go up, the credit that you get from the Commonwealth went down, because we had about 200 more vehicles in fleet this year and about 4 million additional dollars in assessed value.”
Henry County’s Commissioner of Revenue Linda Love said county residents can expect to see tax bills in the mail within the next few weeks, though she is not aware of a significant spike over last year. The county’s personal property tax rate is $1.55 per $100 of assessed value.
Love said the county uses the JD Power (formerly National Automobile Dealers Association or NADA) clean loan valuation guides for assessments.
Easley said that the city uses the same guides, and warned taxpayers that “what you see on your tax bills today, you’ll probably see again next year. But, “there are indicators that the values are starting to cool off now.”