Virginia taxes you in two layers that behave very differently. The Commonwealth collects income and sales taxes through the Virginia Department of Taxation (Virginia Tax) and unemployment tax through the Virginia Employment Commission (VEC). Cities and counties then run their own business license, equipment, meals and lodging taxes. This page is for people who live, work or have employees in Virginia. We are based in Naperville, Illinois and prepare Virginia returns remotely.
How Virginia taxes individual income
Virginia starts with federal adjusted gross income. For tax year 2025 the Form 760 instructions set the rates at 2% on the first $3,000 of taxable income, 3% to $5,000, 5% to $17,000 and 5.75% above that. The 2025 standard deduction is $8,750 for single filers and $17,500 for joint filers; the 2026 legislative summary lists $9,200 and $18,400 starting with tax year 2027.
Virginia lets you subtract Social Security and Tier 1 railroad retirement benefits that are included in federal income. A person 65 or older may also claim an age deduction of up to $12,000 for 2025. For most people born after January 1, 1939, it falls by $1 for each $1 that income (after removing taxable Social Security) exceeds $50,000 for single filers or $75,000 for married filers combined. For the federal side, see taxation of Social Security benefits.
Full-year residents file Form 760, part-year residents Form 760PY, and nonresidents with Virginia-source income, such as a business carried on in Virginia or Virginia real estate, Form 763. A resident also taxed by another state can claim a credit for tax paid there. The 2025 return was due May 1, 2026.
The 2026 session set federal conformity at December 31, 2025, with exceptions for some business expensing rules, so state and federal depreciation can differ. It also made the elective pass-through entity tax permanent. Electing partnerships and S corporations pay 5.75% at the entity level, owners receive a refundable credit, and filing is electronic. It is one of the SALT-cap workarounds in our state tax deduction guide.
Reciprocity for commuters
Virginia has wage reciprocity with five jurisdictions, which matters in Northern Virginia.
- DC and Kentucky: Daily commuters who earn only wages are taxed only by their home jurisdiction.
- Maryland, Pennsylvania and West Virginia: Wage earners who are present 183 days or less and keep no home in the other state are exempt there.
Exempt workers give their employer Form VA-4, and nonresidents recertify yearly. With other states the credit for tax paid applies instead. See our Washington, DC metro page.
Business entity filings
Corporations pay 6% of Virginia taxable income (Form 500); S corporations file Form 502. The State Corporation Commission (SCC) lists a $50 annual registration fee for LLCs, due in the month the LLC was organized, with a $25 late charge. An unpaid LLC can be canceled automatically.
Local taxes in cities and counties
Each Virginia locality, including the independent cities, sets its own rules.
- Business license (BPOL): Under Code section 58.1-3706, a locality over 50,000 residents cannot tax gross receipts below $100,000 ($50,000 for 25,000 to 50,000 residents). Rate caps per $100 of receipts run from 16 cents for contracting and 20 cents for retail to 58 cents for professional services.
- Business equipment: Tangible personal property is taxed locally. Manufacturing and mining machinery and tools form a separate class, capped at the general rate.
- Meals and 2026 changes: Cities, and counties where authorized, may levy meals taxes. From July 1, 2026, voters can approve an extra 1% school construction sales tax.
Our guide to local payroll taxes covers city and county withholding.
Sales and use tax
Virginia Tax lists 5.3% in most places, 6% in Central Virginia, Hampton Roads and Northern Virginia, and 7% in James City County, Williamsburg and York County. Northern Virginia means Arlington, Fairfax, Loudoun and Prince William counties plus Alexandria, Fairfax, Falls Church, Manassas and Manassas Park. Out-of-state sellers become dealers above $100,000 of sales or 200 transactions a year. See sales and use tax.
Payroll
Employers register with Virginia Tax for withholding, file Form VA-5 or pay semi-weekly depending on liability, and file Form VA-6 and W-2s electronically by January 31. VEC unemployment tax applies to the first $8,000 of each employee's yearly wages. New employers start at a 2.5% base rate, plus add-ons, and reports are due April 30, July 31, October 31 and January 31. See payroll services.
How we can help
If you moved between Virginia and DC or Maryland, we can work out which part-year and nonresident returns each side expects. For businesses we can review a PTET election, local license and equipment filings city by city, and Virginia withholding and VEC accounts. H-1B and NRI clients in Fairfax, Loudoun and Prince William can use our multi-state tax service to line up Virginia with federal and India reporting. For letters, see state tax notices.
Frequently asked questions
I live in Northern Virginia and work in DC or Maryland. What do I file?
You file Form 760 in Virginia on all income. DC wages are exempt from DC tax if you do not establish DC residency, and Maryland wages are exempt if you meet the 183-day and no-home tests.
Is Social Security taxed by Virginia?
No. You subtract benefits that appear in federal adjusted gross income, though they may still be partly taxable federally.
Do I need a business license if I work from home?
It depends on your city or county, and localities cannot tax gross receipts below the statutory threshold. Check with your local Commissioner of the Revenue.
Do out-of-state sellers collect Virginia sales tax?
Above $100,000 of Virginia sales or 200 transactions in a year, a seller is treated as an out-of-state dealer and should register with Virginia Tax.
Official sources
- Virginia Tax: 2025 Form 760 resident instructions
- Virginia Tax: Subtractions
- Virginia Tax: Reciprocity
- Virginia Tax: Retail sales and use tax
- Virginia Tax: 2026 legislative summary
This page is a plain-language summary. The official source controls if there is any difference.
General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.