The Roanoke Region is ranked by Forbes 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 30 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
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 up | 5.75% |
Business License Tax Rates (Per $100 of Gross Reciepts)
| Type of Business | Alleghany County | Botetourt County | City of Covington | Franklin County * | Roanoke County | City of Roanoke | City of Salem |
|---|---|---|---|---|---|---|---|
| Retail | 0.10 | 0.10 | 0.20 | NA | 0.20 | 0.20 | 0.20 |
| Wholesale or Distribution | 0.05 | 0.05 | 0.12 | NA | 0.05 | 0.26 | 0.13 |
| Professional 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.