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Virginia's corporate income tax has not been raised in fourty years, since 1972. At 6 percent, our rate is one of the lowest in the nation. In Virginia, items taxed at the state level are not taxed at the local level, with the exception of the sales and use tax levied by both state and local governments. The combined state and local sales tax is 5 percent. Virginia also differs from most states in that its counties and cities are separate taxing entities. A company pays either county or city taxes depending upon its location. If the company is located within the corporate limits of a town, it is subject to town and county levies.
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 January 2011.
In addition, Ernst & Young, in conjunction with The Council on State Taxation (COST), in 2011 deemed Virginia among the top 10 states with the lowest effective tax rates for new capital investments.
Corporate Income Tax
- Tax rate of 6%, not raised in over forty 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% |
6.00% |
6.00% |
| State and Typical Local Tax (combined) |
5.00% |
6.82% |
6.00% |
Source: Research Institute of America,
State and Local Taxes: All States Tax Guide, November 15, 2011
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