ST. LOUIS – It’s that time of year again when personal property tax bills might soon start showing up in your mailboxes. A friendly warning for Missouri car owners, your bill might be more expensive than years past.
Missourians are required to pay personal property taxes to their local county’s assessor’s office each year by Dec. 1. That includes cars, boats, farm equipment and other various pieces of property.
According to the Missouri State Tax Commission, local assessors determine the tax bills by the estimated market value of the property. Counties might differ in assessment rates and tax rates, but the market value of property assessed is constant, regardless of where the personal property tax is collected.
In Missouri, cars are assessed based on trade-in value published by the National Automobile Dealers’ Association (NADA) Official Used Car Guide in an October issue of the previous year. So personal property taxes collected on cars are based on the Oct. 2021 NADA value.
According to the 2022 NADA sales forecast, “through October 2021, the average used vehicle transaction price at franchised dealerships was $25,904, up 19.1% year-over-year.”
What does this mean?
Essentially, if your municipality didn’t take action to lower assessment or tax rates, your property tax bill could be rising around 20%.
How might you notice this on a bill? For example, let’s use St. Louis City’s rates to calculate a difference.
Take a car that was valued at $20,000 when taxes were collected last year. If its value stayed consistent with NADA averages, it would be worth around $24,000.
St. Louis City has roughly a 33.3% assessment rate and a 8.2% tax rate. Factor both of those into the car’s assessed value, a bill that would have been around $540 last year would be worth nearly $650 this tax year.
The basic algorithm to calculate such taxes in your county:
Estimated NADA value * percentage value of assessment rate * percentage value of tax rates.
Why are prices increasing?
The NADA suggests that last year, throughout various stages of the COVID-19 pandemic, supply chain issues might have limited new-vehicle inventory or the production of parts needed for such vehicles. Because of that, consumers who might generally buy new cars started exploring the market for used ones.
Ultimately, that created more demand for used vehicles in the United States, thus leading to higher prices.
“This contradiction is likely due to increased spending by higher income households with lower- and middle-income households feeling the impact of inflation more directly,” said the NADA in the 2022 sales forecast.
It appears values of used cars could rise again heading into next year with the NADA estimating an average year-to-year value increase of 7.2% through September 2022.
Increased personal property tax bills could mean increased revenues throughout the state, though some local assessors might be wary of possible adverse effects.
In September, the St. Charles County Council passed a bill to lower various rates for taxpayers. St. Charles County Executive Steve Ehlmann said it was an attempt to “negate the burden on taxpayers caused by inflation.”
“The property tax the county collects for roads and emergency communications is important to support the county’s infrastructure and public safety,” Ehlmann said. “We are set to maintain a trajectory of support and growth for these areas that is by no means negatively impacted by our voluntary effort to eliminate the revenue windfall that will result if we take no action.”
Despite the change, that might not necessarily a decrease or stagnant cost. The overall rates for taxpayers are also factored in part by for local municipalities in the county, such as St. Charles City or St. Peters.
According to a 2019 Missouri State Tax Commission Report on personal property, “local governments set tax rates are set each year within the limits set by the constitution and statutes. They are based on the revenues received from the prior year, with an allowance for growth based on the rate of inflation.”
Whether all of this means changes to your bill or not, all Missourians are required to pay their property tax and real estate bills by Dec. 31 or postmark a payment via mail by that deadline.
In some places, you can pay your bill online. Here are some of those links:
For more information on Missouri’s personal property taxes, click here.