State taxes: Virginia

Virginia’s tax rates range from 2% to 5.75% and are assessed over 4 income tax brackets. More on Virginia taxes can be found in the tabbed pages below.

Personal income tax

Virginia’s income tax rates are assessed over 4 tax brackets:

• 2% on the first $3,000 of taxable income.
• 3% on taxable income between $3,001 and $5,000.
• 5% on taxable income between $5,001 and $17,000.
• 5.75% on taxable income of $17,001 and above.

Virginia residents must file Form 760, Resident Income Tax Return, by May 1.

Forms and instructions are available for downloading at the Virginia Department of Taxation website

Sales taxes

Virginia’s state sales and use tax rate is 4.3%.

There is an additional 1% local tax, for a total of a 5.3% combined sales tax on most Virginia purchases.

There is an additional 0.7% state tax imposed in the localities that make up Northern Virginia and Hampton Roads, making the rate in these areas 6%.

On July 1, 2005, the state tax rate on some food items decreased to 1.5%, resulting in a combined tax rate of 2.5% (1.5% state tax and 1% local tax).

The state’s consumer use tax is the “other half” of the Virginia retail sales and use tax requirements. Typically, residents incur the use tax when they purchase more than $100 worth of items in a tax year, upon which they did not pay sales tax. Common instances of these types of transactions are purchases from the Internet, mail-order catalogs and cable television shopping channels. The tax also applies to tax-free purchases made outside of Virginia, such as buying furniture at an outlet in another state and having it shipped to Virginia.

Personal and real property taxes

Virginia has no state property tax. The tax is set and collected at the local government level.

Real estate is taxed at the local level based on 100% of fair market value. Effective true tax rates on real estate vary and are set by locality.

Tangible personal property also is taxed at the local level and is based on a percentage or percentages of original cost.

Tangible personal property includes, but is not limited to, machinery and equipment, furniture, fixtures, and trucks and >automobiles. Residents must file Form 762, Return of Tangible Personal Property, Machinery and Tools, and Merchants’ Capital, by May 1.

Inheritance and estate taxes

Virginia does not collect inheritance taxes.

Virginia’s estate tax was decoupled from the federal estate tax laws, and the state imposed its own estate tax through June 30, 2007.

However, on July 1, 2007, House Bill 5018 took effect and repealed the Virginia estate tax for the estates of decedents whose dates of death occurred on or after the effective date. The estates of decedents whose dates of death occurred before July 1, 2007, remain subject to the estate tax provisions.

The repeal of the Virginia estate tax does not affect the filing requirements for fiduciary income tax, regardless of when the date of death occurs.

Other Virginia tax facts

Virginia taxpayers have several electronic filing and payment options.

An annual litter tax is imposed on all Virginia businesses that were in operation on Jan. 1 of the tax year. The tax is $10 per year for each location of manufacturers, wholesalers, distributors or retailers of consumer products and an additional $15 per year per location where groceries, soft drinks and beer are sold. The tax revenues are deposited in the interest-earning Litter Control and Recycling Trust Fund.

The Virginia General Assembly exempted intangible personal property from taxation in 1984 by making the tax rate 0%.

For more information, contact the Virginia Department of Taxation at (804) 367-8031, or visit the state’s website.

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