Virginia’s tax structure includes several major taxes that apply to both individuals and businesses. Indinero offers support for tax services for people who refer to this material and need assistance understanding or managing their tax obligations.
Income Tax
Virginia applies a graduated individual income tax to residents and to nonresidents with income earned in the state.
Key points:
Taxable income up to 3,000 dollars is taxed at 2 percent.
Taxable income between 3,001 and 5,000 dollars is taxed at 60 dollars plus 3 percent of the amount over 3,000 dollars.
Taxable income between 5,001 and 17,000 dollars is taxed at 120 dollars plus 5 percent of the amount over 5,000 dollars.
Taxable income above 17,000 dollars is taxed at 720 dollars plus 5.75 percent of the amount over 17,000 dollars.
Residents pay tax on all income, while nonresidents pay tax only on Virginia-sourced income.
Sales and Use Tax
Virginia administers a statewide sales and use tax on most tangible goods and certain taxable services.
Key points:
The base state rate is 4.3 percent.
A mandatory 1.0 percent local tax brings the general rate to 5.3 percent.
Some regions impose additional sales tax, bringing combined rates as high as 7 percent.
Exemptions include prescription drugs, groceries, and certain business inputs.
Businesses selling taxable goods or services must collect and remit the tax and file periodic returns.
Property Tax
Property tax in Virginia is administered at the local level and varies significantly by jurisdiction.
Key points:
Real property is assessed based on market value determined by local assessors.
Counties and cities set their own mill rates, resulting in different total burdens across the state.
Taxes generally apply to land, buildings, and business tangible personal property.
Localities also tax motor vehicles as personal property.
Corporate Income Tax
Businesses operating in Virginia are subject to a corporate income tax applied to net income.
Key points:
The corporate tax rate is 6 percent.
Corporations adjust federal taxable income based on state rules and use apportionment formulas when operating in multiple states.
Returns are required for corporations with income sourced to Virginia.
Motor Fuel Tax
Motor vehicle fuel is subject to an excise tax that supports transportation infrastructure.
Key points:
Gasoline is taxed at 31.7 cents per gallon.
Diesel is taxed at 32.7 cents per gallon.
Alternative fuels are taxed using gasoline-gallon equivalent conversion.
Tobacco and Other Tobacco Products Tax
Virginia levies excise taxes on cigarettes and other tobacco products.
Key points:
Cigarettes intended to be burned are taxed at 3 cents per cigarette, or 60 cents per pack of 20.
Heated cigarettes are taxed at 2.25 cents per cigarette, or 45 cents per pack of 20.
Roll-your-own tobacco is taxed at 10 percent of the manufacturer’s price.
Moist snuff is taxed at 36 cents per ounce.
Other tobacco products, including vaping liquids, are taxed per weight or volume category.
Communications Tax
Virginia imposes a communications sales and use tax on services such as landline, mobile phone, cable television, and satellite television.
Key points:
The tax is applied at a uniform statewide rate.
Providers collect and remit the tax.
Certain government and nonprofit uses may qualify for exemption.