Business Tangible Property, Machinery & Tools Tax
The Code of Virginia requires all business owners, including home based businesses, to annually report business tangible property for taxation. Situs for business tangible property is determined January 1 of the tax year and business personal property is not pro-rated. Virginia State Code Section § 58.1-3503(17) defines business personal property as all tangible property employed in a trade or business. This includes but is not limited to:
- All office equipment including furniture, fixtures, furnishings, household appliances, computer, printers, etc.
- Machinery, heavy equipment, hand tools, power tools
- Non-licensed vehicles and trailers (tractors, office or storage trailers, etc)
- Leased or rented equipment
- Tangible Property of all types given to a business as a gift
- Items fully depreciated for income tax purposes but still in use
- Property owned personally and used in the business on a full or part time basis
- Any other equipment used in a business or to earn an income
Some property has been classified an intangible by § 58.1-1101 of the Code of Virginia and should not be included. This includes application software not held for sale, leasehold improvements, and inventory.
Machinery & Tools
The Code of Virginia § 58.1-3507 provides that Machinery and Tools (M&T) are limited to property used directly in manufacturing, mining, water well drilling, processing or reprocessing, radio or television broadcasting, dairy, and dry cleaning or laundry businesses. Machinery and Tools should be filed in the same manner as business tangible property, but are subject to a separate tax rate.
Salem City Council sets the business tangible property and machinery and tools tax rate each year. Currently the tax rates are $3.40 per $100 of assessed value for Business Tangible Property and $3.20 per $100 of assessed value for Machinery & Tools.
Both Business Tangible Property and Machinery & Tools are assessed using a percentage of the original capitalized cost of the equipment and the purchase date. The depreciation schedule is the same for both business tangible property and machinery and tools.
Year of Purchase
% of original cost used
2018 & prior
Annual Filing Requirements and Due Dates
Annual Business Tangible Property/Machinery & Tools filings are due by February 15th each year and may be filed online, by mail, or in our office beginning January 1. Filing extensions are not allowed. All returns should be filed by the deadline and can be amended as needed. New acquisitions and disposals from the previous year must be reported and submitted with a complete asset listing. Asset listings should include the following:
- Detailed description of all equipment currently owned by the business (new and previously owned). Include items that are personally owned but used in the business, fully depreciated for federal income tax purposes, and gifted items.
- Original capitalized cost for each item. Capitalized cost is the total cost to acquire the item including freight and installation charges. For older items where the original cost is not available or items that have been gifted to the business a reasonable fair market value may be established.
- Year of purchase for each item.
- Leased, rented, or borrowed property should be listed separately and include the name and address of the owner, lease start/end date, description of the item, original cost, and purchase option.
Business vehicles should not be included in your asset listing. Businesses that do not own any business equipment must still file a 0 return and provide an explanation as to how the business is conducted without the use of property.
Asset listings are required to be filed each year so a copy should be saved for future use. An Excel template is provided below. If filing online this template will need to be converted to a PDF each year to submit.
Sample Asset Listing:
Sample Filing Form:
Business Vehicles (Cars, trucks, trailers, airplanes, boats)
Business Vehicles are file by exception and should not be included in the business tangible property filing. These items should be reported to the Commissioner’s office within 30 days of purchase. These items are assessed using JD Power January Valuation guides or by a percentage of cost if the item is not available in the guide. All trailers, airplanes, and boats are assessed as a percentage of cost. Business vehicles can be filed here Business Vehicles (Cars, trucks, trailers, airplanes, boats).
All businesses that were in operation on January 1, but have since ceased operation are still liable for filing and payment of Business Tangible Property and Machinery and Tools taxes. A business closure form should be completed to close the business account. 2023 Business Closure Form (PDF)