The Motor Vehicle Rental Tax is a tax levied on the rental of motor vehicles in Virginia for a period of less than 12 months, whether from a rental business or from an automobile dealership or other establishment.
Taxes associated with motor vehicle sales or leases of 12 months or more are administered by the Virginia DMV.
Although the tax is collected as a single tax amount from the customer, the Motor Vehicle Rental Tax is made up of 3 components:
- 4% 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% Local Tax: This tax is in addition to the 4% rental tax and is levied on the rental cost for motor vehicles, regardless of weight, but does not apply to motorcycles or mobile homes.
- 2% Rental Fee: This fee is an addition to the above tax amounts levied on all vehicle rentals regardless of weight, but like the 4% local tax does not apply to motorcycles or mobile homes.
For the purposes of the Motor Vehicle Rental Taxes and Fee, charges for violations, citations, or fines and related penalties and fees; delivery charges, pickup charges, recovery charges, or drop charges; pass-through charges; transportation charges; third-party service charges; and refueling surcharges are excluded from "gross proceeds."
See the Guidelines for the Motor Vehicle Rental Taxes and Fee for more information.
You're required to file monthly returns (Form MVR-420) to report taxable proceeds from vehicle rentals and pay the tax collected from customers.
When to file
Returns are due by the 20th of the month following the reporting period. You must file a return each month, even if there is no tax due.
How to file and pay
You're required to file and make payments electronically using the MVR-420 eForm.
Payments can be debited from your bank account or made by ACH credit through your bank. For more information on initiating ACH credit payments with your bank, see our Electronic Payment Guide.
If you are unable to file and pay electronically, you must submit an Electronic Filing Waiver Request.
Exemptions from the Rental Tax
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 renter must keep adequate documentation of such certificate of registration.
No other transactions are specifically exempt from the rental tax.
If you have additional questions, please call 804.404.4180.