At a glance
- Corporate tax
- 6% flat
- Tax on wages
- Up to 5.75%
- Sales tax
- 5.3%–7% by locality
- Economic nexus
- $100,000 or 200 transactions
- Minimum wage
- $12.77/hr ($13.75 in 2027)
- UI wage base
- $8,000
- New-employer UI rate
- 2.5% + add-ons
- Paid leave program
- PFML contributions from April 1, 2028
- Annual report
- Anniversary month — $50 to $850 (by shares)
2026 figures, each explained with its source on the area’s page. On top of the federal baseline.
Setup, in order
Register the corporation in Virginia
Before transacting business in VirginiaApply to the State Corporation Commission for a certificate of authority; the entrance fee depends on authorized shares (up to $2,500).
Register with Virginia Tax
Before the first payroll or taxable saleRegister with Virginia Tax for corporate income tax, withholding and, if needed, sales tax.
Register for unemployment insurance
Before the first Virginia payrollRegister with the VEC for an unemployment insurance account.
Report new hires and contractors
Within 20 daysReport new employees and new independent contractors to the Virginia New Hire Reporting Center.
Get a local business license
When opening a Virginia locationRegister with the city or county commissioner of the revenue for the BPOL license and business personal property tax.
Buy workers’ compensation insurance
Before the first Virginia employee startsWorkers’ compensation coverage is required for Virginia employees.
File the SCC annual report
By the end of each anniversary monthPay the annual registration fee (up to $850) and file the annual report with the SCC.
Prepare for Paid Family & Medical Leave
Before April 1, 2028Set up PFML withholding and remittance with the VEC, or an approved private plan.
The six areas
- AccountingAccounting and state tax in VirginiaVirginia taxes corporations at a flat 6% with a double-weighted sales factor and cost-of-performance sourcing. It conforms to the IRC as of December 31, 2025 but decoupled from the 2025 R&D expensing and from bonus depreciation.Corporate income tax rate6%
- ReceivablesReceivables and sales tax in VirginiaVirginia doesn’t tax SaaS or other software delivered over the Internet. Sales tax runs 5.3% to 7% by locality, and remote sellers register at $100,000 or 200 transactions.Sales tax rate5.3% to 7%
- PayablesPayables and contractors in VirginiaVirginia presumes workers are employees, requires new independent contractors to be reported within 20 days, and wants 1099s only when Virginia tax was withheld. SaaS purchases carry no use tax.1099s to VirginiaIf withheld
- PayrollPayroll taxes and employer rules in VirginiaVirginia payroll withholds up to 5.75%, pays unemployment on the first $8,000, and follows a minimum wage of $12.77 in 2026 that rises to $15.00 by 2028. Paid family leave contributions start April 1, 2028.Minimum wage, 2026$12.77 an hour
- ComplianceCompliance and filings in VirginiaVirginia compliance is Form 500 in the fourth month after year end, an SCC fee and report every anniversary month priced by authorized shares, and local BPOL licenses.Entrance fee (foreign corporation)Up to $2,500
- AdvisoryAdvisory: credits and decisions in VirginiaVirginia’s R&D credit is refundable but small and capped. The bigger planning items are scheduled minimum wage increases through 2028 and a new paid family leave program collecting from April 2028.R&D credit10%
Who you register with
- Virginia TaxCorporate income tax, sales and use tax, withholding
- Virginia State Corporation Commission (SCC)Certificate of authority, annual registration fee and annual report
- Virginia Employment Commission (VEC)Unemployment insurance tax and, from 2028, Paid Family & Medical Leave
- Virginia New Hire Reporting CenterNew-hire and new independent contractor reporting
- Virginia Department of Labor and Industry (DOLI)Minimum wage and payment of wage law
- Virginia Department of the Treasury — Unclaimed PropertyAnnual holder report
Hiring across the border
An employee who lives in one state and works in another is the most common way a startup ends up registered in two. These are Virginia’s neighbors.
- DCDistrict of ColumbiaResidents-only wage tax, employer-paid family leave, and SaaS taxed at 6%
- KYKentuckySimple state rates, local occupational taxes on wages and profits, and SaaS is taxed.
- MDMarylandSaaS taxed at 3% since 2025, county income tax on payroll, and FAMLI from 2027
- NCNorth CarolinaA 2% corporate rate on single sales factor, a net worth franchise tax, and no tax on SaaS.
- TNTennesseeNo wage tax, but franchise, excise and gross-receipts taxes on the entity, and taxed SaaS.
- WVWest VirginiaFalling income tax, a 14-day new-hire rule that covers contractors, and taxed services
Common questions
Does Virginia follow the 2025 federal tax changes?
Not all of it. Virginia conforms to the Internal Revenue Code as of December 31, 2025, but deconforms from the 2025 federal law’s immediate expensing of domestic research and experimental expenditures, including its retroactive and catch-up provisions, from immediate expensing of qualified production property and from the higher expensing limits for depreciable assets. It also continues to deconform from bonus depreciation.
Is SaaS taxable in Virginia?
No. Virginia exempts services that provide access to or use of the Internet, including software, data, content and other information services delivered electronically via the Internet. A SaaS company selling only hosted software to Virginia customers has nothing to collect.
Do we report contractors to Virginia?
Yes, within 20 days of the start of the contract, to the Virginia New Hire Reporting Center. Virginia requires employers to report new independent contractors as well as new employees; a contractor counts as new if it hasn’t had a contract with the company before, or hasn’t been paid for at least 60 days.
Our Virginia office employee lives in DC or Maryland. Do we withhold Virginia tax?
Usually not. Under Form VA-4, a resident of Kentucky or DC who commutes daily to work in Virginia isn’t subject to Virginia withholding, and neither is a resident of Maryland, Pennsylvania or West Virginia whose only Virginia income is wages taxed by their home state. The employee files a VA-4 each year to claim it.
What does it cost to register our Delaware corporation in Virginia?
More than most states, because both SCC fees are based on authorized shares. A Delaware corporation with 10 million authorized shares pays the maximum entrance fee, $2,500, when it registers, and the maximum annual registration fee, $850, every year after that, due by the last day of the month it was authorized in Virginia.
Can a pre-revenue startup get the Virginia R&D credit?
Yes, if it does research in Virginia. The credit is 10% of Virginia qualified research expenses above half the prior three years’ average (5% if there were none), capped at $45,000 a year, or $60,000 with a Virginia college or university, and the excess over tax is refunded. Applications are due to Virginia Tax by September 1 after the year ends, and awards are prorated when the $15.77 million statewide cap is oversubscribed.
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Virginia Tax — Corporation Income Tax
- Virginia Tax — 2025 Form 500 Instructions
- Code of Virginia § 58.1-416 — When certain other sales deemed in the Commonwealth
- Virginia Tax — Retail Sales and Use Tax
- Code of Virginia § 58.1-609.5 — Service exemptions
- Virginia Tax — Withholding Tax
- Virginia Tax — Form VA-4 and instructions
- Code of Virginia § 58.1-320 — Individual income tax rates
- Code of Virginia § 58.1-439.12:08 — Research and development expenses tax credit
- Code of Virginia § 58.1-3706 — Local license tax limits (BPOL)
- Code of Virginia § 58.1-1900 — Classification of employees
- Virginia Employment Commission — Employer FAQs
- Virginia Employment Commission — Paid Family & Medical Leave FAQ
- Code of Virginia § 40.1-28.10 — Minimum wage
- Code of Virginia § 40.1-29 — Time and medium of payment
- Code of Virginia § 63.2-1946 — Virginia New Hire Reporting Center
- Code of Virginia § 13.1-775.1 — Annual registration fees
- Code of Virginia § 13.1-615.1 — Charter and entrance fees
- Code of Virginia § 55.1-2524 — Report and remittance of abandoned property
- Virginia Department of the Treasury — Unclaimed Property
General information for US companies, not tax, legal or accounting advice for yours. Rules and thresholds change; confirm the specifics with a CPA or the agency before you act on them.