New Course! Learn to correct depreciation errors using Form 3115
On March 7th, 2023, Governor Justice signed a bill, HB 2526, into law, cutting the resident income tax rates by 21.25%. The maximum rate residents pay will be 5.12% for 2023, down from 6.5% previously. Most of us knew this change was coming, and I would have shared the details earlier if preparing taxes and filing extensions didn't get in the way.

What many are not aware of is a PERSONAL (NOT real estate) Property Tax Rebate created by the same law. The rebate/credit was a compromise to provide relief without amending the state constitution (a resolution that failed in the previous election). The credit also keeps property tax local - in your county's hands to fund schools and local services.

The rebate takes effect in 2024 as a credit on that year's income tax return (filed in 2025). In this newsletter, I'll tell readers what they need to know to maximize their savings.

[Note - There is also a new non-vehicle business personal property tax credit which I will discuss in a separate newsletter]

The Motor Vehicle Property Tax Adjustment Credit

Yep, that's what it's called, and it's a broad rebate of tax paid on a variety of vehicles (including non-motorized trailers) by a wide swath of individuals and organizations. Here are answers to some common questions:

How Much is the Credit? The credit (rebate for those not filing a tax return) equals 100% of the vehicle personal property tax paid during the tax year. That's right, 100%!

To qualify, the tax must be paid by its due date. Late-paid and delinquent taxes do not qualify.

Also, the Credit is Refundable - this means that if the credit amount exceeds your tax due, you will get the difference paid to you as a refund. Even corporations can receive a refund.
When Does the Credit Become Available? The law takes effect on January 1st, 2024, so tax timely paid in 2024 qualifies for the credit. And here's the kicker - the rebate continues until changed or repealed - 2025 and beyond.

Which Vehicles Qualify? As mentioned earlier, the credit encompasses a variety of personal property residents pay tax on, including ATVs and trailers.

Here's a list of vehicle classes that qualify.

  • Class A - Cars and Trucks: Passenger cars and trucks with a gross weight of 10,000 pounds or less
  • Class B - Trucks: Trucks, truck tractors, or road tractors with a gross weight of 10,001 pounds or more
  • Class G - Motorcycles: Every motorcycle, including motor-driven cycles and mopeds, has a saddle and no more than three wheels
  • Class H - Buses: Every motor vehicle designed for carrying more than seven passengers or transportation of persons for compensation, excluding taxicabs
  • Class T - Trailers: Trailers, boat trailers, or semitrailers of a type designed to be drawn by Class A vehicles with a gross weight of less than 2,000 pounds
  • Class V - Antique Motor Vehicles: Antique motor vehicles are at least 25 years old
  • Class X - Farm Trucks: Used exclusively for the transportation of farm products and supplies by a farmer
  • ATVs - W. Va. Code § 20-15-2: All-Terrain Vehicles - Any motor vehicle designed for off-highway use and to travel on not less than three low-pressure tires, having a seat designed to be straddled by the operator and handlebars for steering control and intended by the manufacturer to be used by a single operator or by an operator and no more than one passenger
Which Vehicles Do NOT Qualify?
  • Class C - Trailers and Semi-Trailers: For example, larger trailers not designed to be carried by Class A Cars and Trucks. They also weigh more than 2,000 pounds.
  • Class J - Taxi Cabs: Motor vehicles used for transporting persons for compensation. Note: If you work part-time for Uber, your vehicle is likely still a Class A.
  • Class M - Mobile Equipment: Self-propelled vehicle not designed for transporting persons or property over the highway, even if it incidentally travels between job sites. This includes farm equipment, implements of husbandry, well-drillers, cranes, and wood-sawing equipment.
  • Class R - Travel Trailer Vehicles: Recreational Vehicles —vehicles designed to provide temporary living quarters for recreation, travel, or camping use.

As you can see, this is an extensive selection of qualifying assets (sorry - your RV didn't make the cut). What is especially surprising is that individuals and businesses qualify for the credit!

Who Qualifies for The Credit? Individual taxpayers qualify, So do Partnerships, S-Corporations, LLCs (sole proprietorships), and C-Corporations.

Partnerships and S-Corporation will likely pass the credit on to partners and shareholders who will claim the credit on their personal returns.

Even vehicle leasing companies qualify. But, they must pass the savings on to the lessee of the vehicle as a discount or refund. This may prove an administrative challenge, so stay on top of them to ensure you receive it.

Note: If you have a flow-through business (Partnership or S Corp), make sure your preparer knows about this credit.

How Do I Apply? There will be a line added to your 2024 WV Income Tax Return(s). There will also be a form created that attaches. Additionally, be prepared to send us receipts, as we'll likely have to scan and attach them to your return.

Those who do not have to file returns (primarily due to their income being non-taxable) will also be able to receive the credit through a separate process - likely, mailing a separate form and receipts directly to the state tax department.

Tip: Do NOT Pay the Second Half of Your 2023 Personal Property Tax Bill Until Early 2024
If you're in the habit of paying for your entire year's personal property taxes as soon as you receive the bill, make 2023 an exception. Only half of the bill is due in 2023. Make sure you only pay that half. If you pay for the second half before its due date in 2024, you will get it back as a tax credit when you file your 2024 income tax return in 2025. Here's what else you'll get back—ALL OF THE PERSONAL PROPERTY YOU TIMELY PAY IN THE FALL OF 2024!

All courses and articles are for informational purposes only and do not constitute tax advice. Taxes are complicated - do not act on course information without consulting a professional. Always refer to treasury regulation before making any tax decision. Read the full disclaimer.

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