Key figures
Virginia payroll
2026, with sources
Withholding and unemployment
Virginia withholds income tax at graduated rates up to 5.75% on income over $17,000, based on the employee’s Form VA-4, with no local income taxes. Returns and payments follow a schedule set by the size of the withholding, and every employer files the annual Form VA-6 with W-2s showing Virginia tax by January 31.
Unemployment insurance runs through the VEC on the first $8,000 of each employee’s wages. A new employer’s base rate is 2.5%, plus across-the-board add-ons such as the pool cost charge and, when the trust fund is at or below 50%, a 0.2% fund building charge, until it has a full fiscal year of history. Quarterly reports are due the last day of the month after each quarter, with a $100 penalty for a late report.
Commuters and reciprocity
Virginia sits in a region where many employees live in one jurisdiction and work in another. Residents of Kentucky and DC who commute daily into Virginia, and residents of Maryland, Pennsylvania and West Virginia whose only Virginia income is wages taxed at home, can claim exemption from Virginia withholding on Form VA-4 each year.
An example: a startup with an office in Arlington employs one person living in DC and one living in Maryland. If both file VA-4 claiming exemption, the company withholds no Virginia tax for them; it registers with DC and Maryland to withhold there instead, and still pays Virginia unemployment tax on both, because they work in Virginia.
Wages and timing
Virginia’s wage-payment rules are set in § 40.1-29, and misclassified workers can recover wages, including damages, under the same section.
- Minimum wage $12.77 in 2026, $13.75 in 2027, $15.00 in 2028.
- Hourly staff paid at least every two weeks or twice a month; salaried staff at least monthly.
- Final pay on or before the next regular payday.
- New employees and new independent contractors reported within 20 days.
The federal baseline
This page covers what Virginia adds. The federal rules underneath it apply here too.
Common questions
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.
Is there a Virginia paid leave payroll tax?
No state program yet, but one is coming. Virginia’s Paid Family & Medical Leave program begins payroll contributions on April 1, 2028 and benefits on December 1, 2028. Until then there is no paid leave payroll deduction in Virginia.
Payroll next door
- DCDistrict of Columbia payrollDC withholds income tax only from DC residents, runs unemployment on the first $9,000 of wages, and charges employers 0.75% for Paid Family Leave, with nothing deducted from employees.
- KYKentucky payrollKentucky payroll is 3.5% state withholding plus local occupational taxes where employees work, unemployment insurance at 2.7% on $12,000 for new employers, and workers’ comp from the first employee.
- MDMaryland payrollMaryland payroll withholds state and county income tax, pays unemployment on the first $8,500, and adds FAMLI contributions of 0.9% from January 1, 2027. Montgomery and Howard counties set their own minimum wages.
- NCNorth Carolina payrollNorth Carolina payroll is flat 3.99% withholding on Form NC-4 and NC-5, unemployment insurance at 1.0% on $34,200 for new employers, workers’ comp from three employees counting officers, and E-Verify from 25.
- TNTennessee payrollTennessee payroll has no state income tax or local wage tax; it is unemployment premiums on the first $7,000 of wages, new-hire reports in 20 days, and workers’ comp from five employees counting officers.
- WVWest Virginia payrollWest Virginia payroll withholds 2.11% to 4.58%, pays unemployment on the first $9,500, and has short timelines: new hires and contractors reported within 14 days, wages at least twice a month.
How Virginia compares
- No tax on wagesStates with no state income tax on wagesVirginia: withholds state income tax. 9 of 51 states are on the list.
- Paid leave payrollStates with a paid leave or disability payroll programVirginia: state paid leave or disability program. 16 of 51 states are on the list.
- Local payroll taxStates with city, county or district payroll taxesVirginia: state-level only. 14 of 51 states are on the list.
Founder guides on this
- PeopleContractor or employee? Classification for startupsContractor or employee depends on control, not the contract. The IRS test, state rules, 1099s, payroll registration and the cost of getting it wrong.
- ComplianceFirst-year compliance calendar for a Delaware C-corpDelaware franchise tax, 1099s, the federal return, payroll filings, state annual reports and sales tax: the deadlines a young C-corp misses most, by month.
More of the Virginia guide
- AccountingAccounting and state tax in VirginiaCorporate tax, conformity to federal rules, apportionment and what it does to your books
- ReceivablesReceivables and sales tax in VirginiaSales tax registration, economic nexus, whether SaaS is taxable, and collecting from customers
- PayablesPayables and contractors in VirginiaPaying vendors and contractors: 1099 filing, use tax, contractor tests and withholding
- ComplianceCompliance and filings in VirginiaRegistering to do business, annual reports, franchise tax and the filing calendar
- AdvisoryAdvisory: credits and decisions in VirginiaCredits, incentives and the decisions that are cheaper to get right the first time
Sources
Checked against each agency’s own page on . Rates and thresholds change, usually on January 1.
- Code of Virginia § 40.1-28.10 — Minimum wage
- Virginia Employment Commission — Employer FAQs
- Code of Virginia § 58.1-320 — Individual income tax rates
- Virginia Employment Commission — Paid Family & Medical Leave FAQ
- Code of Virginia § 40.1-29 — Time and medium of payment
- Code of Virginia § 63.2-1946 — Virginia New Hire Reporting Center
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.