Are Taxes High in Virginia? A Breakdown of State Taxes

Virginia’s tax policies are important for residents and those considering a move. This article details Virginia’s individual income, sales and use, and property taxes.

Virginia Individual Income Tax

Virginia has a progressive income tax system. For 2024, rates range from 2% to 5.75%. For example, the first $3,000 of taxable income is taxed at 2%, while income exceeding $17,000 is taxed at the top rate of 5.75%.

Taxpayers can reduce their taxable income through various deductions and exemptions. Virginia allows a personal exemption of $930 for each filer and claimed dependent. Certain itemized deductions, such as a portion of business interest, and specific deductions for older taxpayers or those contributing to education savings accounts, apply. Military retirement income up to $30,000 for 2024 (increasing to $40,000 in 2025) can be subtracted, and Social Security benefits are exempt from state taxation.

Residents, part-year residents, and non-residents with Virginia-source income are required to file a Virginia income tax return if their Virginia adjusted gross income exceeds certain thresholds. For single filers, this threshold is $11,950, and for married couples filing jointly, it is $23,900 for 2024. Non-residents file Form 763, residents file Form 760, and part-year residents use Form 760PY.

Virginia Sales and Use Tax

Virginia’s statewide sales tax rate is 5.3% for most goods and services. However, some localities impose additional regional or local sales taxes, which can increase the combined rate up to 7% in certain areas.

Certain essential items are exempt or taxed at a reduced rate. Food purchased for home consumption, such as groceries, and essential personal hygiene items are taxed at a reduced statewide rate of 1%. Prescription drugs are exempt from sales tax. Services are not subject to sales tax, unless they are part of a tangible product.

Use tax applies when Virginia sales tax was not paid on tangible personal property purchased outside the state but intended for use, consumption, or storage within Virginia. The use tax rate is the same as the sales tax rate that would have been applied if the item had been purchased in Virginia.

Virginia Property Taxes

Property taxes in Virginia are assessed and collected locally, not by the state. Rates vary significantly by county and city, determined by local budgetary needs.

Real estate property taxes are based on the fair market value of the property, as determined by local assessors. Reassessments occur periodically, with cycles ranging from every two to six years. The tax bill is calculated by multiplying the assessed value by the local tax rate.

Personal property tax in Virginia applies to vehicles, including cars, trucks, and motorcycles. Like real estate, this tax is locally assessed, and rates differ considerably between localities. Vehicle values for tax purposes are determined using recognized pricing guides, such as the J.D. Power Official Used Car Guide, as of January 1st of the tax year.

Overall Tax Landscape in Virginia

Virginia is often characterized as having a moderate overall tax burden compared to the national average. When considering income, sales, and property taxes combined, Virginia’s ranking places it in a middle position among states, reflecting the balance of its tax structure.

Beyond the primary taxes, excise taxes on gasoline, which was 39.10 cents per gallon as of January 2024, and on products like tobacco and alcohol also apply. Virginia does not levy an inheritance or estate tax.

Whether taxes are high or low in Virginia depends on an individual’s financial circumstances and chosen locality. Variability in local property tax rates and the progressive income tax structure affect the total tax impact.