Addison council discusses repealing property tax on personal leased vehicles; staff asked to prepare ordinance

The Addison City Council heard a detailed briefing May 27 on the town's long-standing practice of assessing property tax on personal leased vehicles and directed staff to prepare an ordinance to consider eliminating that tax.

The discussion centered on how the tax originated, the current revenue it produces and a pending state-level change that could render local action unnecessary. Steven Lickman, chief financial officer, told the council Addison adopted an ordinance in February 2001 continuing tax assessments on personal leased cars and light trucks after a state change that otherwise exempted them. “About $20,000,000 of that is personal leased vehicles,” Lickman said. “The personal lease vehicles are about $120,000” in annual property tax revenue to the town.

Council members pressed staff for details about which vehicles are taxed, how the tax is billed, and the timing of any change. Lickman said the tax is generally levied on the leasing company and the appraisal district reports a pooled value; lessees sometimes see a separate line item in their lease billing. He also noted pending legislation that would create a statewide business personal property exemption up to $125,000, which would likely eliminate most local assessments of leased vehicles if voters approve the required constitutional amendment in November.

Council members traded views on whether Addison should act before the statewide vote. Some members said acting now would show residents the town is proactively seeking relief; others said it may be more efficient to wait for the statewide change because the legislative proposal could make the local step redundant. After discussion the council requested staff prepare an ordinance to remove Addison's property tax on personal leased vehicles and bring it forward for formal action at a future meeting. Staff noted any local ordinance would need to be in place before the appraisal district's February roll deadline to take effect for tax year 2027.

The council did not adopt an ordinance on May 27; instead it directed staff to prepare the ordinance and return it for consideration. Lickman advised the council staff would continue monitoring the state process and could update the council after the November vote.

For now, the town's financial staff will prepare ordinance language and additional materials for council consideration and will also attempt to gather further detail about how frequently the lease companies break out the tax as a line item in lessee billing.

"We will know in November," Lickman said of the state amendment's prospects. "If it passes, it will effectively wipe out most of these assessments; if it does not, the town can still choose to change its ordinance."