There seems to be confusion over the Motor Vehicle Property Tax Adjustment Credit. That is the credit on vehicle property taxes paid beginning January 1, 2024, but taxpayers need to know about the credit now.
That is because taxpayers are currently receiving their 2023 personal property tax assessments listing the amount due on their vehicles, the payment and deadline for the first half of the year and the payment and deadline for the second half.
State Revenue Secretary Dave Hardy advises taxpayers to pay only the first half and delay the second half payment until early next year. That’s because the new vehicle property tax credit does not kick in until 2024.
“You definitely want to pay half,” Hardy said on a recent Talkline. “You do not want to pay the full year because when you pay the second half, which is due on April 1, 2024, that (amount) will be eligible for the dollar-to-dollar credit.”
That means the dollar amount will be credited on state taxes owed in 2024. Taxpayers can claim the credit when they file their 2024 tax return in 2025. If they owe state taxes, the amount will be deducted. If they are due a refund, the amount paid in vehicle taxes will be added.
One important caveat is that the vehicle property taxes must be paid on time to qualify for the credit. That means the first half of the assessment must be paid before October 1 of this year, and the second half before April 1 of next year.
“The statute specifically says they must be timely paid,” Hardy said. “I’m sure county officials are glad the word ‘timely paid’ is in the legislation.”
The vehicles that qualify for the credit include cars, trucks, motorcycles, buses, trailers, antique motor vehicles, farm trucks and all-terrain vehicles. Semi-trailers, taxi cabs, travel tailor vehicles and mobile equipment are not included.
The question I keep getting from Talkline listeners is, “Why didn’t the legislature just get rid of the car tax?”
The answer is that they tried. The Legislature placed on the 2022 ballot Amendment Two that would have allowed them to exempt personal property taxes on people’s vehicles, and also on what businesses pay on their inventory, equipment and machinery.
That amendment failed, due in large part to a campaign by Governor Justice to defeat it. He argued that eliminating the car tax would have led to uncertainty regarding funding for local services including education, police and fire protection.
However, Justice promised in return a rebate plan on the car tax. Justice and lawmakers agreed during the legislative session earlier this year to include the vehicle tax credit in a bill that also cut income taxes.
As a result, individuals still must pay personal property taxes on their vehicles, but they can file for the credit when they fill out their income taxes.
I know it is confusing, and the state could have done a better job alerting people on how to claim the credit. I suspect many taxpayers just do not know about the credit or are not going to bother with it, but it can be real savings. The state has allocated $140 million for a full year of the credits.
The West Virginia Tax Division has a lot of helpful information about the vehicle tax credit. Check it out at tax.wv.gov.