For entrepreneurs evaluating Virginia as a business location in 2026, the tax landscape is a key factor. With a state sales tax of 5.3% and potential local additions of up to 0.7%, the combined rate can reach 6.00%.
Economic Nexus in Virginia
Remote sellers must collect Virginia sales tax if they exceed $100,000 in annual sales or 200 transactions within the state. This threshold has been in effect since 2019-07-01. Marketplace facilitators like Amazon and Etsy are also required to collect and remit tax on behalf of third-party sellers. The Virginia Department of Taxation enforces these provisions and provides registration guidance at https://www.tax.virginia.gov.
LLC Formation in Virginia (2026)
Forming an LLC in Virginia costs $100 for the initial filing. There is no annual franchise tax, keeping ongoing costs low. The annual report fee is $50. Virginia imposes a state income tax, which affects pass-through LLC taxation.
The process involves filing Articles of Organization with the Secretary of State, obtaining a federal EIN, and registering for applicable state tax accounts. You will also need a sales tax permit from the Virginia Department of Taxation.
Key Tax Rules
• Virginia has a combined 5.3% state sales tax (4.3% state + 1% local).
• Northern Virginia, Hampton Roads, and Central Virginia have additional 0.7% regional taxes.
• Groceries are taxed at a reduced 1% rate.
• Economic nexus: $100,000 in sales or 200 transactions.
Sales Tax Exemptions
The following categories are generally exempt from sales tax in Virginia: groceries (reduced rate), prescription drugs, medical devices. Businesses should maintain proper documentation for exempt transactions.