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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 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, reaffirmed by Moody's, Fitch, and Standard & Poor's in December 2009.
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 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% |
5.75% |
6.00% |
| 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, 11/17/2010 and 12/15/2010 |
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