What Is Tax 1 and Tax 2 on My Receipt in Virginia?

When examining a receipt in Virginia, consumers often encounter “Tax 1” and “Tax 2” lines. These labels typically represent a combination of state and local taxes applied to a purchase. Understanding these components helps clarify what you are paying for. This article explains the various taxes that contribute to the final amount.

Understanding Virginia’s General Sales Tax

Virginia imposes a statewide sales and use tax on many goods and some services. This state sales tax is frequently identified as “Tax 1” on a receipt, representing the primary state-level levy. Virginia’s general sales tax rate is 4.3% on most tangible personal property and certain services.

This tax applies to a wide array of retail purchases. While most items are subject to the 4.3% rate, some goods receive different tax treatment. For instance, food purchased for home consumption, commonly known as groceries, and certain essential personal hygiene items are taxed at a reduced statewide rate of 1%.

Prescription medications and certain medical devices are exempt from sales tax. Sellers are responsible for collecting this tax at the point of sale and remitting it to the Virginia Department of Taxation.

Understanding Local and Specific Purpose Taxes

Beyond the state sales tax, various local and specific purpose taxes can appear on a Virginia receipt, often labeled as “Tax 2” or additional tax lines. These taxes are levied by cities, counties, or special districts to fund local services and infrastructure. The rates and types of these local taxes vary significantly depending on the specific locality where the transaction occurs.

One common addition is a local sales tax component, which can increase the overall sales tax rate in certain areas. While the state rate is 4.3%, many localities add a 1% local sales tax, bringing the combined rate to 5.3% for most purchases. Some regions, like Northern Virginia and Hampton Roads, may have an additional regional tax, further increasing the total sales tax to 6%. The Historic Triangle area (Williamsburg, James City County, and York County) has an even higher combined rate of 7% due to a regional sales and use tax.

Localities also frequently impose specific taxes on certain types of goods or services. Many cities and counties, for example, levy a meals tax on prepared foods and beverages. These meals taxes vary by locality, with some reaching rates of 4% or more, resulting in total tax rates of 10% or higher on restaurant bills.

Similarly, a lodging tax, also known as a transient occupancy tax, is applied to hotel stays and other temporary accommodations, with rates differing across jurisdictions. A more recent specific local tax is the disposable plastic bag tax, which some cities and counties have adopted. This tax adds 5 cents per bag at grocery stores, convenience stores, and pharmacies. Other less common local taxes include excise taxes on items like tobacco or alcohol, or admission taxes levied on tickets to entertainment events.

Deciphering Your Virginia Receipt: How to Identify “Tax 1” and “Tax 2”

Identifying what “Tax 1” and “Tax 2” represent on a Virginia receipt requires understanding the purchase location, the type of items bought, and the applicable tax rates. “Tax 1” reflects Virginia’s standard sales tax rate of 4.3% on general merchandise. For groceries and certain hygiene items, “Tax 1” shows the reduced state rate of 1%.

“Tax 2” or any subsequent tax lines account for local additions. This can be the 1% local sales tax, which, when combined with the state sales tax, results in a 5.3% total. In some point-of-sale systems, the state and local sales tax components may combine into a single line displaying the total combined rate.

For purchases of prepared food, “Tax 2” is the local meals tax, while for hotel stays, it is the local lodging tax. The specific rate of “Tax 2” provides a clue as to its nature; for example, a 5-cent charge on a bag indicates the plastic bag tax. If there is any uncertainty, checking the website of the local city or county government where the purchase occurred can provide precise details on their specific tax rates and ordinances.