Taxes

Current Corporate Income Tax and Employment Tax Structures

Income and sales taxes in Virginia are levied at the state level. The following information is provided by the Virginia Economic Development Partnership:

Virginia's corporate income tax has not been raised in forty years, since 1972. At 6 percent, our rate is one of the lowest in the nation. In Virginia, items taxed at the state level are not taxed at the local level, with the exception of the sales and use tax levied by both state and local governments. The combined state and local sales tax is either 5.3 or 6 percent depending upon the locality. Virginia also differs from most states in that its counties and cities are separate taxing entities. A company pays either county or city taxes depending upon its location. If the company is located within the corporate limits of a town, it is subject to town and county levies.

Virginia's long tradition of fiscal discipline has earned the Commonwealth a coveted AAA bond rating since 1938, longer than any other state, by Moody's, Fitch, and Standard & Poor's.

Corporate Income Tax

  • Tax rate of 6%, not raised in over thirty years
  • Has a three-factor apportionment formula of payroll, property and sales (with sales double-weighted)
  • A single-factor apportionment election based on sales for manufacturing companies
  • Tax credits for job creation and investment in economically stressed areas
  • No franchise or net worth tax

Sales and Use Tax

  • The total tax is 5.3 percent (4.3 percent state and 1 percent local)
  • A seller is subject to a sales tax on gross receipts derived from retail sales or leases of taxable tangible personal property.
  • Manufacturers do not pay tax on purchases used for production; distributors do not pay tax on items purchased for resale.

Tax Comparison

Taxes

Rates

 

 

 

Virginia

U.S. (Median)

South Atlantic (Median) Income Taxes:

Corporate Income Tax

6.00%

6.50%

6.00%

Sales and Use Taxes:

 

 

 

State Tax

4.30%

5.75%

5.75%

State and Typical Local Tax (combined)

5.30%

6.80%

6.07%

Source: Research Institute of America, November 18, 2014 and The Tax Foundation, Ranking State and Local Tax Rates as of January 1, 2014

The Virginia Guide to Local Taxes on Business is found at http://www.nrvalliance.org/documents/GuidetoLocalTaxes2015-2016.pdf

Current Local Property Tax Assessment and Rate

  • Real Estate Tax - nominal rate of $5.90 per $1,000 assessed value = effective rate of $5.90 per $1,000 or 5.9 mills
  • Machinery and Tools Tax – nominal rate of $15.00 per $1,000 assessed value = effective rate of $07.20 per $1,000 or 7.2 mills
  • Tangible Personal Property (General) – nominal tax rate of $23.50 per $1,000 assessed value = effective rate of $14.10 years 1-5, $9.40 years 6-10, & $4.70 years 11+ per $1,000 or 14.1, 9.4 & 4.7 mills
  • Vehicles - nominal rate of $23.50 per $1,000 assessed value = effective rate of $23.50 per $1,000 or 23.5 mills