What Percentage of Taxes Are Taken Out in VA?

Virginia’s tax structure includes various components, meaning there isn’t a single “percentage of taxes taken out.” The rates individuals experience differ based on their income, location, and types of purchases or assets. A combination of state and local taxes contributes to an individual’s overall tax liability, encompassing income, sales, and property taxes.

Virginia Individual Income Tax

Virginia operates a progressive individual income tax system, where higher income levels are subject to higher tax rates. For the 2024 tax year, Virginia’s income tax rates range from 2% to 5.75%. The lowest rate of 2% applies to taxable income up to $3,000. Income between $3,001 and $5,000 is taxed at 3%, while income from $5,001 to $17,000 is taxed at 5%. Taxable income exceeding $17,000 is subject to the top rate of 5.75%.

Taxable income is determined after accounting for deductions and exemptions. For 2024, the standard deduction is $8,500 for single filers and $17,000 for married couples filing jointly. If itemized deductions exceed the standard deduction, taxpayers may choose to itemize. Common itemized deductions include state and local taxes, mortgage interest, charitable contributions, and medical expenses exceeding an adjusted gross income threshold.

Virginia also provides personal exemptions. An exemption of $930 can be claimed for each qualifying individual, including the taxpayer and any dependents. An additional $800 exemption is available for individuals 65 or older by January 1st of the tax year or who are legally blind.

Tax credits can also reduce a taxpayer’s final income tax liability, offering a direct reduction of the tax owed. Virginia provides various credits with specific eligibility requirements. These include the Low-Income Individuals Credit, available to families with adjusted gross incomes below federal poverty guidelines, and the Earned Income Tax Credit (EITC), which is a refundable credit equal to 15% of the federal EITC. Other credits exist for specific activities or expenses, such as the Educator Deduction.

Virginia Sales and Use Tax

Virginia imposes a statewide sales and use tax on the sale, lease, and rental of tangible personal property, accommodations, and certain taxable services. The general statewide sales tax rate is 5.3%, comprised of a 4.3% state rate and a 1% mandatory statewide local add-on.

Local jurisdictions can levy additional sales tax percentages, leading to varying combined rates across the Commonwealth. Depending on the locality, the total combined sales tax rate can range up to 7%. Some localities may also impose an extra 1% sales tax for school capital projects.

Certain goods and services are exempt from sales tax or taxed at a reduced rate. Most food purchased for home consumption and essential personal hygiene items are taxed at a reduced statewide rate of 1%. Prescription drugs and medicines are generally exempt from sales tax. Other exemptions include items for agricultural production, certain medical devices, and goods purchased for resale.

The concept of “use tax” applies when tangible personal property is purchased outside Virginia but intended for use, consumption, or storage within the state, and Virginia sales tax was not collected. The use tax rate is the same as the sales tax rate that would have applied if the item had been purchased within Virginia. This ensures purchases made out-of-state or online are still subject to an equivalent tax when brought into the Commonwealth.

Virginia Property Taxes

Property taxes in Virginia are primarily levied at the local level by cities and counties, rather than by the state government. These local taxes encompass both real estate and personal property. The revenue generated funds local services, including public safety, libraries, and education.

Real estate property taxes are assessed on the fair market value of land and improvements, such as buildings, as of January 1st of each tax year. Localities determine these assessed values, often through reassessment processes that may occur annually or at multi-year intervals. Assessors analyze sales data of comparable properties, considering factors like size, quality, and location, to determine market value. The real estate tax rate, expressed as a rate per $100 of assessed value, varies widely among localities based on their budget needs.

Personal property tax applies to tangible personal assets, most commonly motor vehicles for individuals. This tax is also levied by cities and counties, with rates differing significantly by locality. Vehicles are typically assessed based on their clean trade-in value as of January 1st of the tax year. The tax is then calculated by applying the local personal property tax rate to this assessed value.

To mitigate the burden of personal property taxes on vehicles, Virginia implemented the Personal Property Tax Relief Act (PPTRA). This act provides tax relief to owners of qualifying personal-use vehicles. Under PPTRA, a portion of the vehicle’s assessed value may be exempt from taxation, or the tax bill may be reduced by an applicable relief percentage. This relief applies to passenger cars, motorcycles, and certain trucks used for non-business purposes.