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Below is a wealth of data and information on State and Local taxes, as well an Incentives so your company is ready for business in Hampton Roads.
State Levied Taxes
Corporate Income Tax: 6%
The corporate income tax rate in Virginia has not increased since 1972.
In Virginia, the corporate income tax is applied to federal taxable income; it functions as a deduction from federal taxes. If a corporation is engaged in multi-state activities and its income is subject to tax in Virginia and other states, it pays tax only on the portion of its income from Virginia sources. In determining this portion, income is divided into allocable and apportionable income. Apportionment is based on a formula of payroll, property, and sales that weighs the corporation’s Virginia operations against its total operations. The sales factor is double weighted.
In November 2017, Forbes.com and Forbes Magazine placed Virginia as the 5th Best State for Business
Unemployment Insurance (Tax per Employee)
U.S Median: $159
Employers must register with the Virginia Employment Commission and pay their unemployment insurance tax if they had one or more persons employed for 20 or more weeks or if they paid wages of $1,500 or more in any calendar quarter in either the current or preceding calendar year. New employers pay at a special rate for an initial period, usually 18-29 months, unless the computed rate, based on claims, exceeds the new employer rate. After the initial period, the employer’s rate is determined by operational experience and the state’s unemployment level is reflected in the financial condition of the Unemployment Compensation Trust Fund.
Workers’ Compensation Employment Insurance Costs (per $100 of Payroll)
U.S Median: $1.32
Since 1994, Virginia has had a partially regulated “competitive rate” or “loss costs” system to determine workers’ compensation rates. The State Corporation Commission (SCC) approves the cost of losses for each industry classification and insurance companies determine the average overhead and profits. “Multipliers’’ to cover these expenses are filed with the SCC and are subject to periodic review. Studies by Actuarial & Technical Solutions show that Virginia has one of the lowest comparative costs of Workers’ Compensation for manufacturers in the nation.
Sales and Use Tax
The following rates are effective for year 2018. Please note that under certain scenarios, exemptions can apply.
- State: 5.3%
- Local: 0.7%
- Total Sales and Use Tax: 6%
- U.S. Average: 6.39%
All tax rates calculated by VEDP, January 2018
Taxes Levied by Locality
Hampton Roads' Locality Tax Summary
Real Estate: Assessed at 100% of its fair market value, is taxed at the local level and includes land, buildings and all improvements.
Business Tangible Property Tax: A tax levied on tangible personal property employed in a trade or business (furniture, fixtures, equipment, machinery, tools, etc.). In Virginia, Business Tangible Property is taxed at the local level. Some exemptions apply.
Machinery and Tools Tax: Localities in Virginia are authorized by the Code of Virginia to segregate certain machinery and tools for local taxation. The machinery and tools tax is levied on the machinery and tools that are used for manufacturing, mining, processing or reprocessing, radio or television broadcasting, dairy, dry cleaning or laundry business. The tax rate on machinery and tools may not be higher than that imposed on other classes of tangible property.
Utility Taxes: Gas, Electric, Water/Sewer, Telephone, Mobile
Virginia offers a variety of performance-based incentives designed to target the needs of companies considering an investment in the Commonwealth. Below is a table briefly describing discretionary and statutory incentives.
Local project specific incentives may also be available. Examples include:
- Economic Development Grants and Loans
- Utility Connections
- Relocation Assistance
- Machinery/Tool Tax Rebates
|Commonwealth's Opportunity Fund||Discretionary fund available to secure a business location or expansion project|
|Governor’s Agriculture and Forestry Industries Development Fund (AFID)||Fund available to support businesses that add value to Virginia-grown agricultural and forestry products|
|Virginia Jobs Investment Program||Program that offers customized recruiting and training assistance to companies creating new jobs or experiencing technological change|
|Foreign Trade Zones||Virginia and Hampton Roads offer foreign trade zones and sub-zones which effectively eliminate or reduce customs duties|
|Enterprise Zones||Provides state and local incentives to businesses that create new jobs and invest in real property|
|Job Creation Grants||Grants for permanent, full-time job creation over a 4-job threshold that meet wage requirements|
|Real Property Investment Grants||Grants for qualified real property investments|
|Technology Zones||Grants specific to individual localities in Hampton Roads which assist technology based companies|
|Sales and Use Tax Exemption||Virginia offers the broadest sales and use tax exemptions in the U.S.|
|Property Tax Exemptions||Property is not taxed at the state level; real estate and tangible personal property are locally taxed. There are no taxes on: intangible property, manufacturers’ inventory and manufacturers’ furniture, fixtures and corporate aircraft|
|Virginia Port Incentives|
|Port Volume Increase Tax Credit||Credit available to companies who increase port cargo through public or private facilities located in Virginia by a minimum of 5% in a single year|
|Barge and Rail Usage Tax Credit||Credit available to companies who move cargo by barge or rail, rather than truck, on Virginia’s highways|
|International Trade Facility Tax Credit||Tax credit for either new job creation or capital investment in an international trade facility as a result of moving 10% more cargo through a Virginia Port Authority-operated cargo facility than in the preceding taxable year.|
|Port of Virginia Economic and Infrastructure Development Grant Program||Grant available to companies who locate or expand within the Zone, and create at least 25 new permanent full-time jobs and are involved in maritime commerce or export or import of manufactured goods through the Port of Virginia|