With used car values spiking because of high demand and limited supply, some Virginia cities and counties are seeking to curb the increased personal property taxes on vehicles.

Virginia is the only state in the region to charge an annual property tax on vehicles. The tax is usually calculated by a vehicle’s value and is set by each locality. For instance, Arlington County charged $5 for every $100 of assessed value in 2021, so about $500 for a vehicle valued at $10,000.

Generally, owners expect those taxes to go down as their cars age. Not so this year with increased demand and lower supply due to the pandemic and supply chain issues.

Late last month, Gov. Glenn Youngkin signed a law allowing localities to charge only a fraction of the tax because of the sky-high values.

“Virginians are in dire need of relief to their wallets,” Youngkin said in a release. “I am proud to sign this legislation and work with the General Assembly to empower localities to lower the cost of living.

“Many Virginians are struggling due to rising prices, now it is up to local leaders across Virginia to step up and fight inflation with real tax relief.”

So far in Northern Virginia, only Loudoun County has made the change, seeking to charge tax on just 80% of a vehicle’s value. The Commissioner of Revenue gave examples of how the tax assessment would change.

Alexandria and Fairfax County are also weighing similar options. Fairfax County would only assess tax on 85% of the value of a vehicle. Alexandria is seeking to assess only 77% of the value, and owners of vehicles that are valued below $5,000 would pay no tax.

For instance, Alexandria estimates that nearly 90% of vehicles in the city will actually increase in value by 25%.

“As a local tax assessed on vehicle owners annually, based on an assessed value, there is perhaps no tax more hated in the Commonwealth of Virginia,” wrote Mayor Justin Wilson in his newsletter.

Alexandria’s Council will bring up the issue this month.

“It is hopeful that the used car market will get back to normal next year,” Wilson wrote.