Motor Vehicle Rental Tax
Welcome to the Virginia Motor Vehicle Rental Tax ("Rental Tax") Information Center. Use this page to access complete information on the Rental Tax for rentors, consumers, and local governments.
- Motor Vehicle Rental Tax Overview
- Exemptions from the Rental Tax
- Frequently Asked Questions
- Virginia Motor Vehicle Rental Tax Forms and Instructions
- FIPS Codes for use with the Motor Vehicle Rental Tax Return (PDF 249Kb)
- 2013 Updated Guidelines for the Motor Vehicle Rental Taxes and Fee (opens in the Laws, Rules and Decisions)
The Motor Vehicle Rental Tax ("Rental Tax") is a tax levied on the rental of motor vehicles in Virginia, whether from a rental business or from an automobile dealership or other establishment, for a period of less than 12 months. The Rental Tax has been in force for many years, and has been administered by the Virginia Department of Motor Vehicles (DMV) since its inception. Legislation enacted by the 2011 Session of the General Assembly transferred the administration and collection of the Rental Tax) from DMV to the Virginia Department of Taxation effective July 1, 2012.
The rentor of the vehicle collects the tax from the customer to whom the vehicle is rented at a single rate that contains three separate components:
- 4 Percent Rental Tax: This tax is imposed on the cost for rental of motor vehicles with a gross vehicle weight rating or gross combined weight rating of 26,000 pounds or less.
- 4 Percent Local Tax: This component, also called "Additional Rental Tax," is levied on the rental cost for motor vehicles, regardless of weight, but does not apply to motorcycles and mobile homes.
- 2 Percent Rental Fee: This component of the Rental Tax is also imposed without regard to vehicle weight, and does not apply to motorcycles or mobile homes.
Rentors are required to file monthly returns to report taxable proceeds from vehicle rentals and pay the tax collected from their customers. Beginning with the return for the month of July 2012, which is due to be filed by August 20, 2012, these returns will be filed with the Department of Taxation.
Effective for rentals of motor vehicles occurring on and after July 1, 2013, i) charges for violations, citations, or fines and related penalties and fees; ii) delivery charges, pickup charges, recovery charges, or drop charges; iii) pass-through charges; iv) transportation charges; v) third-party service charges; and vi) refueling surcharges are excluded from "gross proceeds" for the purposes of the Motor Vehicle Rental Taxes and Fee. More information can be found in the updated Guidelines for the Motor Vehicle Rental Taxes and Fee.
The change in administration from DMV to the Department of Taxation does not affect the collection of the Rental Tax or the rate of the tax. However, rentors will use new forms for filing their Rental Tax returns. Localities will receive monthly revenue distributions for periods beginning July 1, 2012.
The following transactions are not subject to the Rental Tax, and no exemption certificates are required:
- Fee arrangements between the holder of a permit issued by the Department of Motor Vehicles for taxicab services and the driver or drivers of such taxicabs. (Source: Va. Code § 58.1-1735)
- Fee arrangements between a licensed driver training school and a student in that school, whereby the student may use a vehicle owned or leased by the school to perform a road skills test administered by the Department of Motor Vehicles. (Source: Va. Code § 58.1-1735)
- Rentals of self-contained mobile computerized axial tomography scanners to a nonprofit hospital or a cooperative hospital service organization as described in § 501(e) of the Internal Revenue Code. (Source: Va. Code § 58.1-1737)
- Rentals of self-contained mobile units designed exclusively for human diagnostic or therapeutic service to a nonprofit hospital or a cooperative hospital service organization established for research in, diagnosis of, or therapy for human ailments as described in § 501(e) of the Internal Revenue Code, or a nonprofit corporation as defined in § 501(c)(3) of the Internal Revenue Code, established for research in, diagnosis of, or therapy for human ailments. (Source: Va. Code § 58.1-1737)
- Rentals to private nonprofit institutions of learning for the sole purpose of use in driver education instruction that is a part of such institution's curriculum for full-time students. (Source: 24 VAC 20-100-210)
- Rentals to the United States, the Commonwealth or political subdivisions of the Commonwealth for their exclusive use if the purchases are pursuant to required official purchase orders to be paid for out of public funds. A United States government credit card or a Commonwealth of Virginia credit card may also be used if the credit of the federal or state government is bound and billings are sent directly to and paid by the government. (Source: Va. Code § 58.1-1737)
- Rentals to any person for the purpose of re-rental. The person who will be re-renting the vehicle must have a valid rental certificate of registration in order for a transaction to qualify for this exemption and the rentor must keep adequate documentation of such certificate of registration.
No other transactions are specifically exempt from the Rental Tax.