The Commonwealth of Virginia imposes a sales tax on goods and services sold, leased or rented within the state.
As of the date of publication, the general sales tax rate within the state is 5.3 percent. An additional 0.7 percent state tax is added for sales occurring in Northern Virginia and Hampton Roads, creating a 6.0 percent total sales tax in those densely populated regions. The geographic area known as Northern Virginia includes the cities of Fairfax, Alexandria, Falls Church, Manassas, and Manassas Park, as well as the counties of Arlington, Fairfax, Loudoun and Prince William.
According to Virginia Code 58.1-603, Imposition of Sales Tax, the tax also applies to the rental of transitory accommodations and the lease or rent of tangible personal property. Expect to pay sales tax on rental cars, hotel rooms and other such items.
Sellers handle collecting sales tax on the total gross receipts from retail sales. On each transaction, tax amounts must be listed separately from the total sale and then added to the final price.
Reduced Rates for Groceries
Food purchased for home consumption is taxed at a reduced rate of 2.5 percent. This includes grocery staples and cold prepared foods.
Alcoholic beverages, tobacco, prepared hot foods for immediate consumption — along with seeds and plants that produce food — do not qualify for a reduced rate. Most sales completed at restaurants and convenience stores also do not qualify for this reduced rate. Virginia Tax Bulletin 5-78, titled Retail Sales and Use Tax, which deals with the food tax rate reduction, provides a detailed list of eligible qualifying foods.
Virginia sales tax is also collected on vending machine sales.
Determining How Much Tax
When calculating the amount of Virginia Sales Tax, multiply the total price of the transaction by either 5.3 or 6.0 percent, depending on the location. Here are examples:
In Norfolk, which is in the region called Hampton Roads, a $100 sale of general merchandise would incur a sales tax of 6 percent — $6.
In Northern Virginia, the same $100 sale would also require the payment of a 6 percent sales tax.
In Richmond, near the middle of the state, $100 of goods sold would incur $5.30 in sales tax.
General grocery items purchased anywhere in the state are taxed at just 2.5 percent. Consequently, a $100 basket of groceries would cost a total of $102.50 with sales tax.
Beer, wine, and cigarettes are all taxed at the standard rate of 5.3 or 6.0 percent.
Exempt From a Virginia Sales Tax
Individual businesses buying products for resale are exempt from paying Virginia state sales tax. These nontaxable items include goods purchased to be resold in the same form.
The Virginia Department of Taxation provides a general tax exemption certificate to qualified parties, such as commercial watermen, forest harvesters, churches and other legally registered nonprofit organizations. Exemption certificates and resale certificates can be obtained from the Virginia Department of Taxation website.
Any business that completes a transaction without charging a sales tax must retain a copy of the buyer's exemption certificate.
Exemptions for Manufacturers
If a business purchases raw material to be used in the manufacture of a different end product prior to resale, the purchase may qualify for a reseller sales tax exemption. An illustration of this exemption is the process of manufacturing cement. The raw materials that make up cement is sand, concrete and fiber. The act of transforming these raw materials into a final product is considered manufacturing. The use and performance of finished cement are substantially different than the raw materials. In this case, the manufacturer would present an exemption certificate to the supplier of the raw material during purchase and not have to pay sales tax.
Sale Tax Holidays
Each year, the Virginia offers three sales tax holidays. During this time, individual items sold throughout the state are exempt from sales tax. The first period typically occurs in May of each year and offers an exemption for hurricane and emergency preparedness equipment. The second period offers tax-free purchases of school supplies and clothing. This takes place in August, just before public schools open across the state. The third opportunity for tax savings in Virginia typically occurs in October. This period offers tax savings on "Energy Star"- and "WaterSense"-qualified products. Dates vary each year.