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Virginia's moderate corporate income tax has not been raised in more than thirty years. At 6 percent, our rate is one of the lowest in the nation. The combined state and local sales tax is 5.0 percent. Counties and cities are separate taxing entities. Consequently, companies pay taxes to either a county or a city, not to both. In some instances towns do assess local taxes which would be added to county taxes. Virginia's long tradition of fiscal discipline has earned the Commonwealth a coveted AAA bond rating.
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 double-weighted sales factor, which has the effect of reducing tax liability for firms with significant sales to customers outside Virginia
- 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 percent (4 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 |
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| Taxes |
Rates |
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Virginia |
U.S. (Median) |
South Atlantic (Median) |
| Income Taxes: |
| Corporate Income Tax |
6.00% |
6.90% |
6.90% |
| Sales and Use Taxes: |
| State Tax |
4.00% |
5.50% |
5.75% |
| State and Typical Local Tax (combined) |
5.00% |
6.00% |
6.00% |
| Source: Research Institute of America,
State and Local Taxes: All States Tax Guide, 12/18/2007 and 1/15/2008 |
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