It’s tax season again. Many Virginians may have some questions about the different categories of taxes they must pay. With some help from the Virginia Department of Taxation website, below are some helpful facts about state taxes.
As an FYI, you must also pay federal taxes to the IRS in addition to the state taxes. Be sure to contact your tax preparer for any questions you may have.
Personal income tax
Virginia’s income tax rates are assessed over four tax brackets:
- 2% on the first $3,000 of taxable income.
- 3% between $3,001 and $5,000.
- 5% between $5,001 and $17,000.
- 5.75% on $17,001 and above.
Virginia residents must file Form 760, Resident Income Tax Return, by May 1, 2014.
Forms and instructions are available for downloading at the Virginia Department of Taxation website
Virginia’s state sales and use tax rate is 4%.
There’s an additional 1% local tax, for a total of a 5% combined sales tax on most Virginia purchases. Charlottesville’s sales tax rate is 5%, as is Albemarle County’s.
On July 1, 2005, the state tax rate on some food items decreased to 1.5%, resulting in a combined tax rate of 2.5% (1.5% state tax and 1% local tax).
The state’s consumer use tax is the “other half” of the Virginia retail sales and use tax requirements. Typically, residents incur the use tax when they purchase in a tax year more than $100 worth of items upon which they did not pay sales tax, such as purchases from the Internet, mail-order catalogs and cable television shopping channels. The tax also applies to tax-free purchases you make outside of Virginia, such as buying furniture at an outlet in another state and having it shipped back.
Personal and real property taxes
Virginia has no state property tax. The tax is set and collected at the local government level.
Real estate is taxed at the local level based on 100% of fair market value. Effective true tax rates on real estate vary and are set by locality.
Here are Current Local Tax Rates
Tangible personal property also is taxed at the local level and is based on a percentage or percentages of original cost, and includes, but is not limited to, machinery and equipment, furniture, fixtures, and trucks and automobiles. Residents must file Form 762, Return of Tangible Personal Property, Machinery and Tools, and Merchants’ Capital, by May 1, 2014.
Contact information for the personal property tax assessment and collection agencies across Virginia is available on the state’s Department of Motor Vehicles website.
Inheritance and estate taxes
Virginia does not collect inheritance taxes.
Virginia’s estate tax was decoupled from the federal estate tax laws and the state imposed its own estate tax through June 30, 2007.
However, on July 1, 2007, House Bill 5018 took effect and repealed the Virginia estate tax for the estates of decedents whose date of death occurs on or after the effective date. The estates of decedents whose date of death occurs before July 1, 2007, remain subject to the estate tax provisions.
The repeal of the Virginia estate tax does not affect the filing requirements for fiduciary income tax, regardless of when the date of death occurs.