Virginia Taxes

Nationally recognized for its conservative fiscal practices, Virginia has one of the fairest and most stable tax structures of the 50 states. Both businesses and individuals carry their share of the tax load. The General Assembly has kept taxes on industry competitive and has eliminated many tax irritants. The state corporate income tax rate, one of the lowest in the nation, has not increased since 1972. Virginia also offers a very modest local tax bill for industry. Items taxed at the state level are not taxed at the local level, with the exception of sales and use tax; and Virginia taxes new and existing industries equally.

Corporate Income Tax

The Virginia corporate income tax rate is 6 percent of taxable corporate income. For most corporations, taxable income is determined by a three-part formula based on sales, payroll and property factors. 

Virginia allows the following tax credits against the corporate income tax:

  • Major Business Facility Job Tax Credit
  • Worker Retraining Tax Credit
  • Day Care Investment Tax Credit
  • Recycling Equipment Tax Credit

For more information contact the Virginia Department of Taxation at (804) 367-8031 or Click Here.

Annual Corporate Registration Fee

All corporations authorized to transact business in Virginia must pay an annual registration fee. The fee ranges from $100 to $1,700, depending on how many shares the corporation has. Non-stock corporations organized after 1970 pay $25. 

Contact the Virginia State Corporation Commission at 800-552-7945 for more information.  

Withholding Tax

If federal law requires an employer to hold tax from any payment, Virginia also requires withholding. If required to file withholding returns, an employer must register for withholding tax, file income tax withholding returns and pay the income tax to the Virginia Department of Taxation. Employers are responsible for timely payment and filing of their incurred withholding liability.

For more information contact the Virginia Department of Taxation at (804) 367-8031.

Workers' Compensation Insurance

Employers with three or more employees regularly in service in the same business in Virginia must purchase and maintain workers' compensation insurance with a private insurance carrier, have a certificate of self-insurance issued by the Virginia Workers' Compensation Commission, or be a member of a licensed group self-insurance association. 

For more information, contact the Virginia Workers' Compensation Commission at 877-664-2566. 

Unemployment Insurance Tax

Employers must pay unemployment insurance tax if they employ one or more persons for 20 or more weeks during a calendar year, or if they pay wages of $1,500 or more during any calendar quarter. For most businesses the unemployment insurance tax rates range from 0.29 percent to 6.39 percent of the first $8,000 that each employee earns each year. 

For more information, contact the Virginia Employment Commission at 703-803-0000. 

Sales and Use Tax

The sales and use tax is 5 percent, of which the state returns 1 percent to the localities. A seller is subject to a sales tax imposed on gross receipts derived from retail sales or leases of taxable tangible personal property unless the retail sales or leases are specifically exempt by law. When a seller does not collect the sales tax from the purchaser, the purchaser is required to pay a use tax on the purchase unless the use of the property is exempt.

Manufacturers, distributors and other businesses receive exemptions for certain purchases. SEE EXEMPTIONS   

For more information contact the Virginia Department of Taxation at (804) 367-8031.

Utility Consumption Tax

A state consumption tax is levied on kWh (kilowatt hour) usage of electricity and CCF (100 cubic feet) usage for gas. 

  • Electric – $0.00155 to $0.00075 per kWh depending on the amount consumed 
  • Gas – $0.0195 per CCF of natural gas consumed, up to 500 CCF per month 

For more information, contact the Commonwealth of Virginia, State Corporation Commission at (804) 371-9967.

Questions about Virginia taxes? 

Virginia Department of Taxation:
Phone:  (804) 367-8031
www.tax.virginia.gov

The information on this page is provided courtesy of YesMontgomeryVA.org.