Virginia Sales Tax Rates

Total Range for 2024

4.3%–7%

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Why do you need to collect sales tax in Virginia?

If you’re selling goods and services in Virginia then sales tax might apply! To determine your obligation, you need to understand “nexus,” which ties businesses to states for tax purposes.

Two types of nexus exist:

  1. Physical Nexus: Having a physical presence, like an office, warehouse, or employees in Virginia, triggers this type. If you do, you likely need to collect sales tax.
  2. Economic Nexus: This kicks in when your sales within Virginia exceed a certain economic threshold. Even without a physical presence, surpassing this threshold requires collecting sales tax.

In Virginia, there is also a transaction threshold of 200, which means that even if your sales aren’t over $100,000 if you’ve sold more than 200 items then you still need to pay sales tax.

Is what you’re selling taxable in Virginia?

Now that you understand the basics of Virginia’s sales tax and nexus thresholds, let’s delve into whether your specific products or services are taxable.

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How to register for sales tax in Virginia

To register for sales tax in Virginia, you have two options: online or by mail. Here’s a breakdown of both methods:

Online Registration:

  1. Business Online Services Account: This is the recommended method. If you haven’t already, you’ll need to create a Business Online Services Account with Virginia Tax https://www.tax.virginia.gov/businesses.
  2. Adding Sales Tax: Once logged in, navigate to your account and select “File/ Pay Taxes.” There, you can choose to add “Sales and Use Tax” as a new tax type.

Mail-in Registration:

  1. Form R-1: You’ll need to complete the Business Registration Form (Form R-1) https://www.tax.virginia.gov/register-business-virginia.
  2. Existing Registration: If you’re already registered with Virginia Tax for another purpose, update your existing registration using the “Retail Sales and Use Tax” section on Form R-1.
  3. Mailing the Form: Send the completed Form R-1 to the address provided on the form.

How to collect sales tax in Virginia

  1. Collect the Tax:  At the point of sale, add the appropriate sales tax to the total on your customer’s receipt. Most Point-of-Sale (POS) systems can automate this calculation.
  2. Maintain Records:  Keep good records of your sales and sales tax collected. This includes invoices, receipts, and sales reports.
Example:

You are a small business based in Richmond, Virginia selling handcrafted wooden toys. A customer purchases a toy for $25.00.

  • Richmond has a combined sales tax rate of 6% (4.3% state + 1.7% local).
  • Sales tax: $10 x 5.3% = $1.325
  • Total price: $10 + $1.325 = $11.325

FAQs

Do you have a physical nexus in Virginia?

A business has physical nexus in Virginia if it has any of the following connections to the state:

  • Physical Presence: This includes having an office, warehouse, store, or any other place of business located in Virginia.
  • Employees or Contractors: Having employees, salespeople, or independent contractors physically working in Virginia can establish nexus.
  • Inventory: Storing inventory within Virginia, even if through a fulfillment service like Amazon FBA, creates physical nexus.
  • Ownership of Property: Owning real estate or other tangible personal property in Virginia qualifies as physical nexus.
  • Leased Property: Leasing property for business purposes in Virginia establishes nexus.
  • Deliveries: Making more than 12 deliveries of merchandise per year into Virginia, not by common carrier (like UPS or FedEx), can trigger nexus.
Do you have an economic nexus in Virginia?

You have economic nexus if your business makes more than $100,000 in annual gross sales from Virginia customers or has at least 200 separate sales transactions to Virginia customers in the last calendar year.

What is use tax in Virginia?

In Virginia, use tax applies to tangible personal property you use, store, or consume in the state,  when no sales tax was paid at the time of purchase.  Here’s a breakdown:

  • Purpose:  Use tax ensures that everyone pays their fair share of sales tax, even on items bought out-of-state or online without sales tax collected.
  • Rate: The use tax rate in Virginia is the same as the combined sales tax rate for your location.
Do you need a seller/reseller permit?

In Virginia, the term “seller/reseller permit” isn’t commonly used. There are two key permits relevant for sales tax purposes:

  1. Sales Tax Certificate (Form ST-4): This essentially acts as your seller permit in Virginia. You’ll receive this certificate after registering for sales tax with the state. It allows you to collect sales tax on retail sales within Virginia.
  2. Resale Certificate (Sales and Use Tax Certificate of Exemption): This isn’t technically a permit, but a certificate you use to purchase goods tax-free from wholesalers or other businesses. You present this certificate to the seller to show you intend to resell the items, and they won’t charge you sales tax.

Here’s a quick breakdown of when you need each:

  • Sales Tax Certificate: You need this if you’re selling taxable goods (most tangible personal property) at retail within Virginia, regardless of your physical location. If you have economic nexus, you’ll need to register and collect sales tax.
  • Resale Certificate: You need this when purchasing goods for resale from a wholesaler or retailer to avoid paying sales tax upfront. You’ll then collect sales tax from your own customers when you sell the items.
How to get a sales tax permit/license in Virginia?

To get your sales tax “permit” (really a Sales Tax Certificate) in Virginia:

  1. Online: Create a Virginia Tax Business Online Services Account and register for “Sales and Use Tax.”
  2. Mail-in: Fill out and mail Form R-1, adding “Retail Sales and Use Tax” if already registered for something else.

After registering, you’ll receive a Sales Tax Certificate to display at your business. Remember, electronic filing is required!

When are Virginia's Returns Due?

Virginia sales tax returns are due on the 20th day of the month following the reporting period. This applies to both monthly and quarterly filers.  Here’s a breakdown:

  • Monthly filers: If your sales tax liability is high enough to require monthly filing, your returns are due on the 20th of each month following the sales month.
  • Quarterly filers: If you qualify for quarterly filing, your return deadlines are:
    • April 20th (for sales in January, February, March)
    • July 20th (for sales in April, May, June)
    • October 20th (for sales in July, August, September)
    • January 20th (for sales in October, November, December)
How to file sales tax in Virginia

Virginia requires electronic filing and payment of sales tax unless you qualify for a waiver  https://www.tax.virginia.gov/sales-and-use-tax. Here are your two main options:

  1. Business Online Services Account: This is the recommended method. Log in to your account on the Virginia Tax website  https://www.tax.virginia.gov/businesses and navigate to “File/ Pay Taxes.” Select “Sales and Use Tax” to file your return and make the payment.
  2. Web Upload:  This option allows you to upload a file containing your sales tax data. The system validates the information and lets you know if there are any errors before submission.
Is anyone exempt from sales tax in Virginia?

Exempt Customers:

  • Government Agencies: Federal, state, and local government agencies are generally exempt from paying sales tax on purchases made for official government business.
  • Certain Non-Profit Organizations: Qualifying non-profit organizations may be exempt from sales tax on purchases used for exempt purposes.

Exempt Purchases:

  • Groceries: Most groceries are taxed at a reduced rate of 2.5% in Virginia.
  • Prescription Drugs and Medical Equipment: Prescription drugs and certain medical equipment are exempt from sales tax.
  • Educational Textbooks: Textbooks purchased by students for use in educational institutions are exempt.
  • Occasional Sales: Occasional sales by non-profit organizations, limited to under 23 events per year, are exempt for food and meals.

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