Virginia levies a general state sales and use tax at a rate of 5.3% as of 2023. But with local taxes added, residents in certain areas of the Commonwealth pay as much as 7% in total sales tax. Understanding Virginia’s sales tax system is crucial for consumers and businesses operating in the state. This guide covers Verginia sales tax calculator and everything you need to know about Virginia sales tax for the 2023 tax year.
Virginia Sales Tax Calculator
The Virginia sales tax calculator is a tool that automatically calculates the total sales tax due for a purchase in Virginia based on the purchase amount and location.
To use the calculator, the user first selects the county or city where the purchase will occur from a dropdown menu. This populates the appropriate state and local sales tax rates for that locality.
Verginia Sales Tax Calculator
Verginia Sales Tax Calculator
The user then enters the total purchase price. The calculator automatically multiplies the purchase price by the sales tax rates for that location to calculate the total sales tax. The total tax amount is displayed along with a breakdown of state and local taxes.
The Virginia sales tax calculator provides a quick and easy way for consumers and businesses to estimate the sales tax owed on purchases in different parts of Virginia. By eliminating manual tax rate lookup and calculations, it simplifies the process of determining sales tax obligations. The automatic computation helps improve accuracy and compliance when filing sales tax returns.
Overview of Virginia Sales Tax
Virginia first enacted a sales tax in 1966 at a rate of 2%. Since then, the base state tax rate has gradually climbed to today’s level of 5.3% through various legislative changes. Sales tax applies to purchases of most goods, along with some services.
In addition to the statewide rate, localities in Virginia can impose their own sales taxes that further increase the total rate paid by consumers. The average combined state and local tax rate is around 6% based on current census data. However, large cities may reach up to 7% in some cases.
Virginia sales tax also applies to vehicles purchased in the state. At both the state and local levels, car sales are assessed based on the full purchase price rather than a trade-in value.
What Transactions are Taxable?
Virginia broadly taxes retail sales of tangible personal property along with explicitly defined services. Some examples of taxable transactions include:
- Clothing and shoes
- Furniture and home furnishings
- Electronics and appliances
- Sporting goods
- School supplies
- Digital goods like music downloads or ebooks
- Restaurant meals
- Alcoholic beverages
- Hotel stays
- Automobile purchases and leases
Virginia follows most state rules when it comes to defining taxable goods. However, it does exempt groceries from sales tax which many states tax. Overall, consumers pay sales tax on the majority of routine purchases in Virginia.
Exemptions to Virginia Sales Tax
While the sales tax in Virginia is extensive, the state provides several noteworthy exemptions, including:
- Groceries – Food purchased for home consumption is exempt from sales tax, excluding prepared meals, alcohol, and tobacco.
- Prescription drugs and prosthetics – Prescriptions, prescription medical equipment, and select over-the-counter drugs are tax free.
- School supplies – Sales tax holidays temporarily lift taxes on some back-to-school items like clothing, computers, and school supplies.
- Home energy – Residential electricity, gas, oil, propane, firewood, and coal are exempt year-round.
- Farm equipment and machinery
- Manufacturing materials and equipment
- Nonprofits – Churches, charitable organizations, and some schools qualify to buy goods tax free with an exemption certificate.
Consumers should keep these exemptions in mind when making purchases in Virginia to avoid overpaying sales tax.
Who Collects and Remits Virginia Sales Tax?
In Virginia, responsibility for charging, collecting, reporting, and remitting sales taxes falls on retail businesses and sellers. Consumers then pay tax to the retailers at the point of sale on taxable items.
Online and remote sellers also must collect Virginia sales taxes on deliveries into the state if they meet federal economic nexus thresholds. Following the South Dakota v. Wayfair Supreme Court decision in 2018, remote sellers exceeding either 200 transactions or $100,000 in Virginia sales within a calendar year must charge Virginia tax.
Marketplace facilitators like Amazon that make sales on behalf of third-party vendors also now have nexus and must collect tax based on that economic activity under Virginia law.
How Sales Tax Collections Fund Virginia’s Budget
Sales and use tax accounts for a sizable share of Virginia’s overall tax revenue each year. In fiscal year 2022, Virginia generated over $4.3 billion in sales tax which made up 17% of its general fund. Sales tax trails only income tax among Virginia’s revenue sources.
These funds support core state government services like:
- Education – K-12 schools, state universities, financial aid programs.
- Healthcare – Medicaid, mental health services, substance abuse treatment.
- Transportation – Road and infrastructure construction, public transit.
- Public safety – State police, forensics labs, prisons.
- Local aid – Payments to counties and municipalities that offset property taxes.
Without robust sales tax collections, Virginia would need to slash funding for these critical programs or shift the burden onto other taxpayers.
Recent Changes to Virginia Sales Tax Laws
Virginia tweaks its tax code every year through new legislation and budget provisions. Here are some recent sales tax law changes to note for 2023:
- Online sales tax expansion – Economic nexus thresholds took effect in 2019 to require more out-of-state retailers to collect Virginia tax on online and catalog sales.
- Tobacco and vaping tax hikes – Tax rates on traditional and e-cigarettes increased significantly in 2020 and 2021 to discourage use.
- Hybrid vehicle fees – Surcharges enacted in 2020 apply to electric and hybrid vehicle registrations to replace lost gas tax revenue.
- Repeal of grocery tax – Virginia grocery purchases became permanently exempt from state tax starting in 2022 after a series of temporary tax holidays.
- PPP conformity – Virginia aligned with federal law to exempt forgiven Paycheck Protection Program loans from being taxed.
Potential Future Changes
Some possible sales tax reforms on the horizon in Virginia include:
- Expanding the sales tax base to more services
- Imposing statewide taxes on groceries and non-prescription drugs
- Increasing the general state sales tax rate
- Allowing broader local sales tax authority
Virginia routinely examines its sales tax policies and makes updates accordingly. Stay on top of the latest laws in 2023 that may affect your tax bill as a Virginia taxpayer.
Sales Tax Compliance Tips for Businesses
Any business that sells taxable goods or services in Virginia needs to adhere to sales tax laws. Here are some tips for staying compliant:
- Register for a tax ID – Sign up for a sales and use tax account after crossing sales thresholds. You can register online through the Virginia Tax Center.
- Integrate software – Use solutions like AvaTax to automatically calculate sales tax and file returns. This avoids errors from manual calculations.
- Charge proper rates – Ensure your POS system applies the correct combined state and local tax rate based on delivery address. Zip code rates can be obtained through the state.
- Collect on delivery sales – If you ship to Virginia addresses or have mobile sales territory in the state, be sure to charge state and local taxes appropriately.
- File returns on time – Returns for state tax are due the 20th of the month following the reporting period. Local returns may have different deadlines.
- Keep exemption certificates – Maintain any valid resale or nonprofit exemption paperwork from Virginia customers.
Staying on top of sales tax compliance is crucial for any business selling in Virginia. Consider outsourcing to an accountant or using software if you are struggling to manage this complex and evolving tax on your own.
Conclusion
Virginia provides consumers with moderate sales tax rates compared to some other states, but cities and counties can push the total burden above 7% in areas like Norfolk and Virginia Beach. Carefully planning purchases and understanding exemptions allows Virginians to reduce their tax expenses. Meanwhile, businesses must closely follow Virginia’s rules and retail trends to collect and remit the correct sales tax amounts in an increasingly complex digital economy. With e-commerce growing and Virginia’s tax policies constantly changing, both shoppers and sellers should be mindful of how sales tax will impact their finances in 2023 and beyond.
