(The Center Square) – The annual property tax Missourians pay on motor vehicles at least 10 years old will be reduced by 85% under a bill in the Legislature.
Currently, a motor vehicle is annually assessed at 33.3% of its true value on Jan. 1 of each calendar year. House Bill 2164, sponsored by Rep. Cyndi Buchheit-Courtway, R-Festus, would reduce the rate to 5% for motor vehicles at least 10 years old, based on the model year, and used solely for non-commercial purposes.
“I hope this committee would agree that this is one adjustment we can make to lower a tax which will benefit many of our citizens,” Buchheit-Courtway said during testimony on Wednesday before the Downsizing State Government Committee.
No one testified against the bill, which would take effect with payments due on Dec. 31, 2022.
Buchheit-Courtway said similar bills to eliminate or change the assessed property taxes on motor vehicles have stalled at various stages of the legislative process. She also said the Legislature couldn’t eliminate the tax.
“Elimination of the personal property tax would require going through the initiative petition process and seeking voter approval to do so,” Buccheit-Courtway said. “Changing the level of assessment to a lower level just requires legislative approval and the signature of the governor.”
In the bill’s fiscal note, the Oversight Division of the Committee on Legislative Research found the bill would reduce the tax per car for an automobile 11 years old and older by $69—from $81 to $12.
The Office of Administration’s Budget and Planning department stated in the fiscal note that the bill could reduce state revenue by $1.2 million by fiscal year 2025. It estimated that local revenues may be reduced by $252 million in 2022 and as much as $305 million in 2024. Revenues to the Blind Pension Trust Fund, which receives an annual tax of 3 cents on each $100 of assessed value of a taxable property, are estimated to be reduced by $883,589 in 2022 and $1.1 million in 2024.
Missouri’s Department of Revenue estimates 51.2% of the state’s 7.1 million registered vehicles are at least 10 years old. The percentage will increase to 74.4% in 2025, based on current registrations.
Budget and Planning used the U.S. Department of Transportation data to determine the average price of new vehicles purchased between 1990 and 2019. Using the Internal Revenue Service’s depreciation schedule, Budget and Planning estimated the current approximate fair market value for each model year. The average taxable value of automobiles 10 years old and older would drop from $874 to $131, a decline of $743. For a 2015 automobile, the average taxable value drops $1,032, from $1,214 to $182.
The State Tax Commission reported in the fiscal note that the bill has a possible negative impact on local taxing jurisdictions, such as school districts and counties reliant on property taxes as a source of revenue. There are 2,500 tax entities and 4,000 different tax rates throughout the state, according to information Oversight obtained from the State Auditor.
According to the Department of Revenue’s State Tax Commission 2020 Annual Report, $22 billion of Missouri’s $119 billion in total assessed valuation – 18.37% – comes from personal property.
Missouri’s vehicle property tax is the fourth-highest in the nation, according to a rating by Wallet Hub. Missouri’s average annual taxes on a $25,000 car are $656; Virginia is the highest at $1,012. Only 27 states currently have a vehicle property tax.
“I think we need to let people have a break when it comes to vehicles,” said Rep. Ben Baker, R-Neosho and chairman of the committee, during the hearing. “This will be a good bill to get done.”