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Corporate Taxes

Low Costs in a Top State for Business

It’s no secret that Virginia is an ideal place for business. The Roanoke Region is ranked by Forbes among the Top 15 places in the nation for low cost of doing business. CNBC has consistently ranked Virginia in the top five states for business. Virginia’s long fiscal tradition of fiscal discipline has earned that state a coveted AAA bond rating. And since counties and cities are separate taxing entities, companies only pay taxes to one locality, never to both. The evidence is clear: it’s not only easier to do business in the Roanoke Region, it’s smarter, too.

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

Corporate Income Tax

  • Tax rate of 6%, is one of the lowest in the nation and has not been raised in over 30 years (U.S. average is 6.97%).
  • Has a three-factor apportionment formula of payroll, property, and sales (with sales 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

Individual State Income Tax

Taxable IncomeRate
$3,000 or less2%
$17,001 and up5.75%

Business License Tax Rates (Per $100 of Gross Reciepts)

Type of BusinessAlleghany CountyBotetourt CountyCity of CovingtonFranklin County *Roanoke CountyCity of RoanokeCity of Salem
Wholesale or Distribution0.050.050.12NA0.050.260.13
Professional Services0.290.290.58NA0.580.580.58
Business Services0.180.180.36NA0.360.360.36
Specific types of businesses can be subject to business license taxes which are based upon gross receipts. Manufacturers are exempt from business license taxes.
* 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.

Learn More about the Roanoke Region of Virginia