An Overview of Virginia State Taxes
Virginia residents pay several forms of state taxes. In addition to income taxes, Virginians also pay sales tax. Property owners need to pay taxes on their real estate, and local authorities oversee the collection of these taxes.
Like many states, Virginia has a progressive income tax, which means that the percentage you pay depends on your income. The more you earn, the higher your tax rate. Sales taxes vary depending on location and type of purchase. For example, taxes on food items are lower than on other items.
With some exceptions, sales tax gets collected at the point of sale, which means that Virginia residents mainly need to worry about income tax when filing their returns each year.
It is vital to understand state tax laws because failure to file tax returns can result in fines, delayed refunds or the garnishment of future payments, and other penalties. In extreme cases, you could also face a court appearance and receive jail time.
Luckily, Virginia state taxes are relatively easy to handle once you understand a few basic principles.
Here is what you need to know about Virginia state taxes.
Table of Contents
Virginia Income Tax
You need to file income tax returns if you are a Virginia resident, you file federal tax returns, and you meet the specific income threshold.
The tax requirements apply to both full-time residents and those who reside in Virginia for part of the year. Non-residents may also need to file taxes if they earned income while working in Virginia.
The income thresholds are $11,950 for single filers and those who are married but file separately. Married couples who file jointly need to file taxes if you earn more than $23,900 combined for the year.
Virginia has a progressive tax system. In this system, the percentage of your income on which you pay in-state tax depends on your income bracket. Every taxpayer within the same bracket pays the same percentage of income to the state. This percentage rises depending on how much you make.
Virginia has four income brackets. The amount of money that you use for this calculation is your taxable income, which is your total income minus any expenses, deductions, or credits.
- If you have between $0 and $3,000 of taxable income, your Virginia tax rate is 2%. The maximum amount that would pay in this bracket is $60.
- Virginia residents with between $3,001 and $5,000 of taxable income pay $60 plus 3% on any income over $3,000. For example, if your income was $4,000, you would only pay a 3% rate on the $1,000 that put you in the second income bracket. So your total state income tax bill would be $60 plus 3% of $1,000, or $30. Your total tax bill in this example would be $90.
- The third income bracket includes Virginians who make between $5,001 and $17,000 in taxable income. At this level, you pay $120 from the lower tax brackets plus 5% on any income over $5,000.
- The highest tax bracket includes those who have more than $17,000 in taxable income. In this bracket, you pay $720 plus 5.75% on all income above the $17,000 threshold. For example, if your taxable income was $20,000, you would pay $720 plus 5.75% on the $3,000 above the $17,000 threshold. The calculation would look like this: $720 + $172.50 = $892.60.
Tax Forms and Instructions
Virginia publishes tax forms online. They also include directions so that you can figure out which documents you need to complete. If you file an individual income tax return, you use Form 760. Part-year residents file Form 760PY, and nonresidents who earn income in Virginia use Form 763. The collection of documents on this website also includes Schedule A forms, which you use to record and calculate deductions. There are also forms for adjustments, waivers, and extensions.
The date for filing state income tax is May 1.
Virginia Sales Tax
The sales tax for most of Virginia is 5.3%. Several areas have a slightly higher rate. Hampton Roads and Northern Virginia both have a 6% sales tax rate. The Historic Triangle, which includes the city of Williamsburg and York County, has a sales tax rate of 7%.
Food for home consumption (items from a grocery store that you use for meals at home) gets taxed at a rate of 2.5%. Virginia recently expanded this sales tax category to include some personal care and hygiene items such as diapers and tampons.
The food tax does not apply to alcohol or already-prepared meals.
Sales Tax Exemptions
Some items are exempt from sales tax. These items include:
- Products sold to the government, public transit authorities, the Virginia Port Authority, and veterans care centers.
- Utilities such as electricity, water, and natural gas.
- Agriculture, forestry, and fishing products and equipment.
- Raw materials and equipment for manufacturing, industrial operations, and research.
- Professional, insurance, repair, or transportation services.
- Newspapers, magazines, and advertising placement.
- Medical supplies, medical equipment, and prescription and over-the-counter medications.
- School lunches, school textbooks, and educational materials.
Virginia Property Taxes
Virginia does not have state-wide property taxes. Instead, these taxes get administered by cities, counties, or towns in the state. Property tax rates vary depending on where you live.
In general, property taxes are higher in larger population centers. For example, in Richmond, Virginia, the property tax rate is 1.2%. However, in less-populated areas such as Cumberland County, the rate is 0.78%. In the smaller city of Charlottesville, the rate is 0.95%.
A recent survey said that nationwide, the effective tax rate for real estate averaged 1.16%. So even large population centers such as Richmond are in the average range in terms of property taxes, and many places in Virginia are below average.
Virginia Estate Taxes
An estate tax is a tax on someone’s estate assets after they die; an inheritance tax is a tax on the assets that go to the deceased individual’s heirs. Virginia does not have an estate tax or inheritance tax. You do not have to pay taxes on your estate after you die. It goes directly to your heirs without any additional taxation.
Virginia had a state estate tax that was equal to the federal death tax credit. However, when the federal government stopped the death tax credit, Virginia likewise stopped levying an estate tax.
Depending on the value of the estate, you may be subject to federal estate taxes. Also, some financial products, such as marital trusts, do not get an estate tax exemption and may be subject to inheritance taxes.
Tips for Filing Taxes in Virginia
Virginia state tax returns are due on May 1. You can file for an automatic extension to extend your filing deadline to November 1. Military members and those living abroad have until July 1 to file.
If your income is $69,000 or less, you may be eligible to file electronically via the Free File system.
You need to make sure to include all your income for the year because both federal and Virginia state taxes use graduated income tax rates. The amount you pay depends on your income. As you prepare to file your taxes, you can also look at expenses and gather information about potential credits and deductions that could affect your tax bracket.
Most people who earn income need to file taxes. There is a minimum earning threshold over which you must file taxes by law. For federal taxes, people who make $12,000 or more per year need to file an income tax return. However, if your employer withholds income tax or if you can earn a refund or tax credit, you can file even if you do not meet the income threshold.
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