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Taxes

The Roanoke Region is ranked by Forbes.com among the Top 15 places in the nation for low cost of doing business, which means low operating costs and low taxes.

And since counties and cities are separate taxing entities, companies only pay taxes to either a county or a city, not to both. Virginia's long tradition of fiscal discipline has earned the state a coveted AAA bond rating.

Corporate Income Tax:

  • Tax rate of 6%, one of the lowest in the nation and not raised in over thirty years. (U.S average is 6.97%)
  • Has a three-factor apportionment formula of payroll, property and sales (with sale double-weighted)
  • A double-weighted sales factor, which has the effect of reducing tax liability for firms with significant sales to customers outside Virginia.
  • Tax credits for job creation and investment in economically stressed areas such as old neighborhoods and buildings.
  • No franchise or net worth tax
  • An employer receives withholding tax tables when registered.

Virginia Does Not Tax:

  • Property at the state level
  • Localities do not have separate school district taxes
  • Intangible property
  • Manufacturers' inventory
  • Manufacturers' furniture, fixtures or corporate aircraft.
Newly covered employers are taxed at 3.23% on a taxable wage base of $8,000. According to the U.S. Department of Labor, Virginia employers paid an average of 0.37% in 2011. (The U.S. average was 0.97%)

Source: Commonwealth of Virginia, 2008

Retail Sales and Use Tax

  • Combined state and local sales tax is 5.3 percent (4.3% state + 1% local).
  • A seller is subject to a sales tax on gross receipts derived from retail sales or leases of taxable tangible personal property.

Sales Tax Exemptions:

  • Manufacturers' purchases used directly in production, including machinery, tools, spare parts, raw materials and industrial fuels
  • Items purchased for resale by distributors
  • Certified pollution control equipment and facilities
  • Custom computer software
  • Purchases used directly and exclusively in research and development
  • Utilities delivered through lines, pipes, and mains
  • Most film, video, and audio production-related purchases
  • Charges for Internet access, related communications services, and sales of software via the Internet

Individual State Income Tax

Taxable Income Rate
$3,000 or less 2%
$3,001 - 5,000 3%
$5,001 - 17,000 5%
$17,001 and more 5.75%


 



 

Selected Local Tax Rates 

Locality Real Estate* Personal Property Machinery & Tool^
Alleghany $0.69 $5.95 $0.89
Botetourt $0.79 $2.71 $0.90-.76
Franklin $0.55 $2.36 $0.70-.28
Roanoke Co. $1.09 $3.50 $0.71-.43
Roanoke City $1.22 $3.45 $2.07-.69
Salem $1.18 $3.25 $2.28-.81
Covington 0.71 $5.60 $0.83
Town of Vinton $1.16 $4.50 $1.05-.60

*Per $100 of assessed value. ^Value for tax purposes depends on year of purchase.

For complete information, visit Weldon Cooper. Real Estate and Personal Property tax rates shown are the actual rates; effective rates may be lower. Source: Local government

Business License Tax Rates 

Specific types of businesses can be subject to business license taxes which are based upon gross receipts.  Manufacturers are exempt from business license taxes.

Business License Tax Rates Per $100 of Gross Receipts
Type of Business Alleghany County Botetourt County City of Covington Franklin County** Roanoke County City of Roanoke City of Salem
Retailer 0.20 0.10 0.20 NA 0.20 0.20 0.20
Mail Order Firm 0.10 NA NA NA NA 0.20 0.20
Wholesale/Distribution 0.05 0.05 0.12 NA 0.05 0.26 0.13
Financial Services 0.29 0.29 0.58 NA 0.58 0.58 0.58
Business Services 0.18 0.18 0.36 NA 0.36 0.36 0.36
** Franklin County does not levy a business license tax and is the only locality in the region that taxes merchants capital  on specific nonmanufacturing businesses at $1.08 per $100 of original cost.

Lower Your Costs

Doing business in the Roanoke Region will cost you less than almost anywhere else. Read More

Business Works In Roanoke

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