-
Overall Rank
31
Down 4 places since 2026 -
24
Down 7 places since 2026 -
38
Down 1 place since 2026 -
13
No change since 2026 -
30
Down 2 places since 2026 -
Unemployment Insurance Tax Rank
36
Up 1 place since 2026
Virginia ranks 31st overall on the 2027 State Tax Competitiveness Index.
Score 5.02 / 10
Notable Changes Virginia is singled out in the study for this year's changes.
In the 2027 Index
Virginia fell four places overall to 31st, a decline mostly attributable to other states adopting competitive reforms while the Commonwealth stood still. Virginia’s corporate tax ranking dropped the most compared with its other Index rankings, sliding from 17th to 24th. While many states conform to full bonus depreciation under Section 168(k) and Section 174A, Virginia remains decoupled from these provisions. Additionally, the Commonwealth allows municipalities to establish local gross receipts taxes, further reducing its competitiveness.
Snapshot date: The 2027 Index measures each state's tax law as of July 1, 2026. Changes enacted after that date are not reflected in these ranks.
About Virginia's Tax Code
Virginia’s tax code includes all major tax types. The state’s individual income tax has remained stable over four decades. However, this stability is not necessarily a positive factor, as many states have implemented significant income tax reforms in recent years, leaving Virginia behind. The Commonwealth’s four tax brackets were established in 1987 and are not adjusted for inflation. The progressive income tax structure has a top marginal rate higher than most of its neighbors, including Kentucky, North Carolina, Tennessee, and West Virginia. Additionally, Virginia requires individual income tax filing and withholding for nonresidents working even a single day in the state.
Virginia’s elective pass-through entity tax (PTET) was scheduled to sunset after tax year 2026, but this sunset was eliminated during the 2026 legislative session, making this election permanent.
While Virginia’s flat corporate income tax rate of 6 percent is around the national average, it is lower than most of Virginia’s neighbors (except North Carolina and Kentucky). The state conforms to the federal treatment of net operating losses, does not tax net CFC tested income (NCTI), does not have a throwback rule, and does not impose statewide gross receipts or capital stock taxes. However, Virginia allows municipalities to establish local gross receipts taxes and does not permit businesses to claim federal bonus depreciation under Section 168(k) and Section 174A, which negatively impacts the state’s tax competitiveness. Implementing both provisions allowing permanent full expensing could improve Virginia’s business tax climate. Virginia’s sales tax rate is relatively competitive, though the state could improve its sales tax structure by broadening its base to include more consumer services (but not business inputs). In recent years, local and regional sales tax authority has been expanded.
Virginia does not impose estate or inheritance taxes, making it more appealing to wealthy households and retirees. Most of Virginia’s shortcomings are at the local level, with a trio of taxes on business personal property (with no de minimis exemption), business inventory, and business gross receipts. Counties and independent cities are entitled to impose their choice of two of these three taxes.
Component Scores
#31 overall · 5.02 / 10Each component is scored from 0 to 10, where 10 is best. Select a component for its detail page.
| Component | Rank | Score | |
|---|---|---|---|
| Corporate Taxes | #24 | 5.28 / 10 | |
| Individual Income Taxes | #38 | 4.81 / 10 | |
| Sales Taxes | #13 | 5.38 / 10 | |
| Property Taxes | #30 | 4.94 / 10 | |
| Unemployment Insurance Taxes | #36 | 4.56 / 10 |
Ranking Changes, 2020–2027
#31 in 2027 · down 7 places from 2020Virginia ranked 24th in 2020 and ranks 31st in 2027, a decline of 7 places. The axis is zoomed to the state's range. Ranks for 2020 through 2026 are backcast under the current methodology.
Show the Table
| Year | Overall | Corporate | Individual Income | Sales | Property | Unemployment Insurance |
|---|---|---|---|---|---|---|
| 2020 | 24 (5.15) | 20 (5.34) | 35 (4.88) | 9 (5.59) | 25 (5.20) | 35 (4.60) |
| 2021 | 25 (5.11) | 20 (5.33) | 37 (4.76) | 9 (5.56) | 26 (5.17) | 35 (4.60) |
| 2022 | 28 (5.08) | 20 (5.36) | 37 (4.80) | 9 (5.54) | 26 (5.15) | 40 (4.35) |
| 2023 | 27 (5.10) | 19 (5.35) | 36 (4.90) | 12 (5.44) | 29 (5.08) | 39 (4.52) |
| 2024 | 22 (5.18) | 20 (5.35) | 32 (5.00) | 9 (5.67) | 28 (5.05) | 41 (4.50) |
| 2025 | 27 (5.08) | 28 (5.18) | 34 (4.97) | 13 (5.42) | 29 (5.03) | 41 (4.50) |
| 2026 | 27 (5.06) | 17 (5.44) | 37 (4.80) | 13 (5.35) | 28 (5.01) | 37 (4.57) |
| 2027 | 31 (5.02) | 24 (5.28) | 38 (4.81) | 13 (5.38) | 30 (4.94) | 36 (4.56) |
Virginia Compared across the States
#31 overallEach row places the states on a 0 to 10 score scale for one measure. Virginia is the large outlined dot, and the dashed line is the 50-state median, so a dot to its right scores better than the typical state. Hover over or tab to any dot for detail, and select it to open that state's profile.
Overall
#31 5.02
Corporate Taxes
#24 5.28
Individual Income Taxes
#38 4.81
Sales Taxes
#13 5.38
Property Taxes
#30 4.94
Unemployment Insurance Taxes
#36 4.56
- Virginia
- Other states, by rank (1st to 50th)
- 50-state median
Virginia and Its Neighbors
#31 overallVirginia borders 5 states and ranks 31st overall; 4 of them rank higher and 1 ranks lower. It also borders the District of Columbia, which is left out of that count.
-
Tennessee #8 Score 5.99 23 places better -
North Carolina #11 Score 5.60 20 places better -
Kentucky #26 Score 5.20 5 places better -
West Virginia #29 Score 5.09 2 places better -
Virginia #31 Score 5.02 This state -
Maryland #44 Score 4.35 13 places behind -
District of Columbia #47* Score 4.17
What Each Component Includes
The five components of the Index, what each one covers, and where Virginia lands. Open any component for the full breakdown.
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Corporate Taxes
Rank #24Includes corporate income taxes and gross receipts taxes. Measures the impact of each state’s principal tax on business activities.
Full Breakdown for Virginia → -
Individual Income Taxes
Rank #38Covers the tax individuals pay on income, and with it a significant number of businesses — sole proprietorships, partnerships, and S corporations — that report their income through the individual income tax code.
Full Breakdown for Virginia → -
Sales Taxes
Rank #13Covers the general sales tax levied on the purchase price of goods and services, plus excise taxes on gasoline, diesel, tobacco, vapor products, beer, and spirits, and taxes on digital advertising.
Full Breakdown for Virginia → -
Property Taxes
Rank #30Includes taxes on real and personal property, net worth, and the transfer of assets — among them capital stock, estate, inheritance, and real estate transfer taxes.
Full Breakdown for Virginia → -
Unemployment Insurance Taxes
Rank #36Covers the taxes employers pay into the state unemployment insurance program to finance benefits for workers recently unemployed.
Full Breakdown for Virginia →
Tax Data Explorer
Every policy variable behind Virginia's 2027 scores, grouped by the report's tables, as of July 1, 2026. Its bordering states are shown alongside to start. Search the variables and values, or add up to 4 states to compare side by side.
156 data points · Shaded values differ from Virginia
Corporate Taxes: Corporate Income Tax Rates
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Bracket 1 | 6.0% > $0 | 8.25% > $0 (differs) | 5.0% > $0 (differs) | 8.25% > $0 (differs) | 2.0% > $0 (differs) | 6.5% > $0 (differs) | 6.5% > $0 (differs) |
| Gross Receipts Tax | No | No | No | No | No | Yes (differs) | No |
| Gross Receipts Tax Minimum Rate | n.a. | n.a. | n.a. | n.a. | n.a. | 0.02% (differs) | n.a. |
| Gross Receipts Tax Maximum Rate | n.a. | n.a. | n.a. | n.a. | n.a. | 0.1875% (differs) | n.a. |
| Gross Receipts Tax Rate Used in the Index | n.a. | n.a. | n.a. | n.a. | n.a. | 0.15% (differs) | n.a. |
Corporate Taxes: Tax Credits and Gross Receipts Deductions
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Job Credits | No | Yes (differs) | Yes (differs) | Yes (differs) | No | Yes (differs) | Yes (differs) |
| Research and Development Credits | Yes | No (differs) | Yes | Yes | No (differs) | No (differs) | Yes |
| Investment Credits | No | No | Yes (differs) | No | No | Yes (differs) | Yes (differs) |
| Compensation Expenses Deductible | n.a. | n.a. | n.a. | n.a. | n.a. | No (differs) | n.a. |
| Cost of Goods Sold Deductible | n.a. | n.a. | n.a. | n.a. | n.a. | No (differs) | n.a. |
Corporate Taxes: Net Operating Losses
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Conforms to Federal NOL Treatment | Yes | Yes | Yes | Yes | No (differs) | No (differs) | Yes |
| Carryback (Years) | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | 0 (differs) | 0 (differs) | Conforms to federal treatment |
| Carryback Cap | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | $0 (differs) | $0 (differs) | Conforms to federal treatment |
| Carryforward (Years) | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | 15 (differs) | 15 (differs) | Conforms to federal treatment |
| Carryforward Cap | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | Conforms to federal treatment | Unlimited (differs) | Unlimited (differs) | Conforms to federal treatment |
Corporate Taxes: Treatment of Capital Investment
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Section 168(k) Expensing | 0% | 0% | 0% | 0% | 15% (differs) | 20% (differs) | 100% (differs) |
| Conforms to Section 163(j) Limitation | Yes | Yes | Yes | Yes | Yes | No (differs) | Yes |
| GILTI Inclusion | Decouples | 50% Inclusion (differs) | Decouples | 50% Inclusion (differs) | Decouples | 5% Inclusion (differs) | 50% Inclusion (differs) |
| Section 174 Expensing | No | No | No | Yes (differs) | No | Yes (differs) | Yes (differs) |
| Section 168(n) Expensing | No | No | No | No | No | No | Yes (differs) |
Corporate Taxes: Other Corporate Base Variables
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Conformity Status | Static (current) | Rolling (differs) | Static (current) | Rolling (differs) | Static (not current) (differs) | Rolling (differs) | Static (current) |
| Allows Federal ACRS or MACRS Depreciation | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Allows Federal Depletion | Yes | Yes | Yes | Partial (differs) | Partial (differs) | Partial (differs) | Yes |
| Throwback Rule | No | Yes (differs) | No | No | No | No | No |
| Foreign Tax Deductibility | No | Partial (differs) | No | Yes (differs) | No | Yes (differs) | No |
| Corporate AMT | No | No | Yes (differs) | No | No | No | No |
| Brackets Indexed for Inflation | Flat CIT | Flat CIT | Flat CIT | Flat CIT | Flat CIT | Flat CIT | Flat CIT |
Individual Income Taxes: Individual Income Tax Rates
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Bracket 1 | 2.0% > $0 | 4.0% > $0 (differs) | 3.5% > $0 (differs) | 2.0% > $0 | 3.99% > $0 (differs) | No Income Tax (differs) | 2.11% > $0 (differs) |
| Bracket 2 | 3.0% > $3,000 | 6.0% > $10,000 (differs) | n.a. (differs) | 3.0% > $1,000 (differs) | n.a. (differs) | n.a. (differs) | 2.81% > $10,000 (differs) |
| Bracket 3 | 5.0% > $5,000 | 6.5% > $40,000 (differs) | n.a. (differs) | 4.0% > $2,000 (differs) | n.a. (differs) | n.a. (differs) | 3.16% > $25,000 (differs) |
| Bracket 4 | 5.75% > $17,000 | 8.5% > $60,000 (differs) | n.a. (differs) | 4.75% > $3,000 (differs) | n.a. (differs) | n.a. (differs) | 4.22% > $40,000 (differs) |
| Bracket 5 | n.a. | 9.25% > $250,000 (differs) | n.a. | 5.0% > $100,000 (differs) | n.a. | n.a. | 4.58% > $60,000 (differs) |
| Bracket 6 | n.a. | 9.75% > $500,000 (differs) | n.a. | 5.25% > $125,000 (differs) | n.a. | n.a. | n.a. |
| Bracket 7 | n.a. | 10.75% > $1,000,000 (differs) | n.a. | 5.5% > $150,000 (differs) | n.a. | n.a. | n.a. |
| Bracket 8 | n.a. | n.a. | n.a. | 5.75% > $250,000 (differs) | n.a. | n.a. | n.a. |
| Bracket 9 | n.a. | n.a. | n.a. | 6.25% > $500,000 (differs) | n.a. | n.a. | n.a. |
| Bracket 10 | n.a. | n.a. | n.a. | 6.5% > $1,000,000 (differs) | n.a. | n.a. | n.a. |
| Standard Deduction (Single Filer) | $8,750 | $16,100 (differs) | $3,360 (differs) | $3,350 (differs) | $12,750 (differs) | n.a. (differs) | n.a. (differs) |
| Personal Exemption (Single Filer) | $930 | n.a. (differs) | n.a. (differs) | $3,200 (differs) | n.a. (differs) | n.a. (differs) | $2,000 (differs) |
| Personal Exemption Credit (Single Filer) | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
| Personal Exemption per Dependent | $930 | n.a. (differs) | n.a. (differs) | $3,200 (differs) | n.a. (differs) | n.a. (differs) | $2,000 (differs) |
| Personal Exemption Credit per Dependent | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
| Average Local Income Tax Rate | None | None | 2.25% (differs) | 3.20% (differs) | None | None | 0.42% (differs) |
| Surtaxes on Wage Income | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. |
Individual Income Taxes: Marriage Penalty, Capital Income, Indexation
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Marriage Penalty | Yes | Yes | No (differs) | Yes | No (differs) | n.a. (differs) | Yes |
| Married Couples Can File Separately on One Return | No | Yes (differs) | Yes (differs) | No | No | n.a. (differs) | Yes (differs) |
| Convenience Rule | No | No | No | No | No | No | No |
| Interest Taxed | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes |
| Dividends Taxed | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes |
| Capital Gains Taxed | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes |
| Combined Capital Gains Tax Rate | 5.75% | 10.75% (differs) | 3.5% (differs) | 11.7% (differs) | 3.99% (differs) | n.a. (differs) | 4.58% (differs) |
| Tax Brackets Indexed for Inflation | No | No | Yes (differs) | No | Yes (differs) | n.a. (differs) | No |
| Standard Deduction Indexed for Inflation | No | Yes (differs) | Yes (differs) | Yes (differs) | No | n.a. (differs) | Yes (differs) |
| Personal Exemption Indexed for Inflation | No | Yes (differs) | Yes (differs) | No | Yes (differs) | n.a. (differs) | No |
| Progressivity Ratio | 1.00 | 1.26 (differs) | 1.00 | 1.37 (differs) | 1.00 | n.a. (differs) | 1.00 |
Individual Income Taxes: Other Individual Base Variables
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Federal Income Used as State Tax Base | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes |
| Conformity Status | Static (current) | Rolling (differs) | Static (current) | Rolling (differs) | Static (not current) (differs) | n.a. (differs) | Static (current) |
| Credits for Taxes Paid to Other States | Yes | Yes | Yes | Yes | Yes | n.a. (differs) | Yes |
| AMT Levied | No | No | No | No | No | n.a. (differs) | No |
| Recognition of S Corporation Status | Yes | No (differs) | Yes | Yes | Yes | Yes | Yes |
| Section 179 Expensing Limit | $1,250,000 | $25,000 (differs) | $100,000 (differs) | $25,000 (differs) | $25,000 (differs) | $2,560,000 (differs) | $2,560,000 (differs) |
| Tips | Taxable | Taxable | Taxable | Taxable | Taxable | n.a. (differs) | Taxable |
| Overtime | Taxable | Taxable | Taxable | Taxable | Taxable | n.a. (differs) | Taxable |
| Filing and Withholding Threshold Index | 0 | 10 (differs) | 0 | 0 | 0 | 10 (differs) | 5 (differs) |
Individual Income Taxes: Other Individual Income Variables
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Income Recapture | No | No | No | No | No | n.a. (differs) | No |
Sales Taxes: Sales and Excise Tax Rates
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| State Sales Tax Rate | 5.30% | 6.00% (differs) | 6.00% (differs) | 6.00% (differs) | 4.75% (differs) | 7.00% (differs) | 6.00% (differs) |
| Average Local Sales Tax Rate | 0.47% | 0.00% (differs) | 0.00% (differs) | 0.00% (differs) | 2.35% (differs) | 2.61% (differs) | 0.60% (differs) |
| Maximum Local Sales Tax Rate | 2.70% | None (differs) | None (differs) | None (differs) | 3.50% (differs) | 2.75% (differs) | 1.40% (differs) |
| Gasoline Tax (Cents per Gallon) | 42.40 | 35.70 (differs) | 26.40 (differs) | 46.81 (differs) | 41.25 (differs) | 27.40 (differs) | 35.70 (differs) |
| Diesel Tax (Cents per Gallon) | 43.5 | 35.7 (differs) | 23.4 (differs) | 47.66 (differs) | 41.25 (differs) | 28.4 (differs) | 35.7 (differs) |
| Cigarette Tax (Dollars per Pack of 20) | $0.60 | $5.07 (differs) | $1.103 (differs) | $5.00 (differs) | $0.45 (differs) | $0.62 (differs) | $1.20 (differs) |
| Beer Tax (Dollars per Gallon) | $0.2565 | $0.79 (differs) | $0.8906 (differs) | $0.60 (differs) | $0.6171 (differs) | $1.2868 (differs) | $0.1774 (differs) |
| Spirits Tax (Dollars per Gallon) | $23.47 | $6.68 (differs) | $9.56 (differs) | $5.46 (differs) | $18.23 (differs) | $4.46 (differs) | $8.98 (differs) |
| Vapor Tax Ratio to Cigarette Tax | 11.00% | 167.4667% (differs) | 83.3333% (differs) | 214.305% (differs) | 5.00% (differs) | 26.1667% (differs) | 7.50% (differs) |
Sales Taxes: Business-to-Business Exemptions
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Business Inputs | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable | Some Taxable |
| Farm Equipment | Exempt | Taxable (differs) | Exempt | Exempt | Exempt | Exempt | Exempt |
| Office Equipment | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Manufacturing Machinery | Exempt | Taxable (differs) | Partial (differs) | Exempt | Exempt | Exempt | Exempt |
| Manufacturing Raw Materials | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Business Fuel and Utilities | Exempt | Exempt | Exempt | Exempt | Exempt | Partial (differs) | Taxable (differs) |
| Business Leases and Rentals | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Information Services | Exempt | Taxable (differs) | Exempt | Taxable (differs) | Exempt | Exempt | Taxable (differs) |
| Software as a Service (SaaS) | Exempt | Taxable (differs) | Taxable (differs) | Partial (differs) | Exempt | Taxable (differs) | Taxable (differs) |
| Platform as a Service (PaaS) | Exempt | Taxable (differs) | Taxable (differs) | Partial (differs) | Exempt | Exempt | Taxable (differs) |
| Digital B2B Products | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) | Exempt | Taxable (differs) | Taxable (differs) |
| Payroll Services | Exempt | Taxable (differs) | Exempt | Exempt | Exempt | Exempt | Exempt |
| Data Center Purchases | Exempt | Taxable (differs) | Exempt | Exempt | Exempt | Exempt | Exempt |
| Digital Advertising Tax | No | No | No | Yes (differs) | No | No | No |
Sales Taxes: Consumer Goods and Services in the Base
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Groceries | Local Tax Only | Exempt (differs) | Exempt (differs) | Exempt (differs) | Exempt (differs) | Alternate Rate (differs) | Exempt (differs) |
| Clothing | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable | Taxable |
| Prescription Medication | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Nonprescription Medication | Exempt | Exempt | Taxable (differs) | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) |
| Gasoline | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Landscaping | Exempt | Taxable (differs) | Taxable (differs) | Exempt | Exempt | Exempt | Taxable (differs) |
| Repair Services | Exempt | Taxable (differs) | Exempt | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) |
| Real Estate Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Parking | Exempt | Taxable (differs) | Taxable (differs) | Exempt | Exempt | Taxable (differs) | Taxable (differs) |
| Dry Cleaning | Exempt | Taxable (differs) | Taxable (differs) | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) |
| Fitness Services | Exempt | Taxable (differs) | Taxable (differs) | Exempt | Exempt | Exempt | Exempt |
| Barber Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Veterinary Services | Exempt | Exempt | Taxable (differs) | Exempt | Exempt | Exempt | Exempt |
| E-Books | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) | Taxable (differs) | Taxable (differs) | Exempt |
| Streaming Video | Exempt | Taxable (differs) | Exempt | Taxable (differs) | Taxable (differs) | Taxable (differs) | Exempt |
| Medical Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Legal Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Financial Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Accounting Services | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt | Exempt |
| Sales Tax Holiday | Yes | No (differs) | No (differs) | Yes | No (differs) | Yes | Yes |
Sales Taxes: Sales Tax Structure
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Uniform Base Definitions | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Unified Tax Administration | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Safe Harbor for Remote Sellers | Sales or Transactions Threshold | Sales or Transactions Threshold | Sales or Transactions Threshold | Sales or Transactions Threshold | Gross Sales Threshold (differs) | Gross Sales Threshold (differs) | Sales or Transactions Threshold |
Property Taxes: Property and Capital Stock Tax Rates
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Property Tax Collections per Capita | $2,296 | $4,458 (differs) | $1,118 (differs) | $1,982 (differs) | $1,203 (differs) | $921 (differs) | $1,258 (differs) |
| Property Tax as a Percentage of Personal Income | 2.97% | 3.95% (differs) | 1.92% (differs) | 2.49% (differs) | 1.83% (differs) | 1.39% (differs) | 2.27% (differs) |
| Assessment Limit | No | Yes (differs) | No | Yes (differs) | No | No | No |
| Levy Limit | No | Yes (differs) | No | No | No | No | Yes (differs) |
| Capital Stock Tax Rate | None | None | None | None | 0.15% (differs) | 0.25% (differs) | None |
| Capital Stock Tax Maximum Payment | n.a. | n.a. | n.a. | n.a. | Unlimited (differs) | Unlimited (differs) | n.a. |
| Payment Options for Capital Stock and Corporate Income Taxes | n.a. | n.a. | n.a. | n.a. | Pay both (differs) | Pay both (differs) | n.a. |
Property Taxes: Property Tax Bases
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Tangible Personal Property Tax | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Tangible Personal Property De Minimis Exemption | None | $225,000 (differs) | $1,000 (differs) | $20,000 (differs) | None | None | None |
| Intangible Property Tax | No | No | Yes (differs) | No | No | Yes (differs) | No |
| Inventory Tax | Partial | No (differs) | Yes (differs) | Partial | No (differs) | No (differs) | Yes (differs) |
| Real Estate Transfer Tax | Yes | Yes | Yes | Yes | Yes | Yes | Yes |
| Split Roll | No | Yes (differs) | No | No | No | Yes (differs) | Yes (differs) |
| Split Roll Ratio | 1.00 | 1.94 (differs) | 1.00 | 1.00 | 1.00 | 1.60 (differs) | 4.00 (differs) |
| Estate Tax | No | 16% (differs) | No | 16% (differs) | No | No | No |
| Inheritance Tax | No | No | 16% (differs) | 10% (differs) | No | No | No |
| Gift Tax | No | No | No | No | No | No | No |
Unemployment Insurance Taxes: UI Tax Rates
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Minimum Rate | 0.10% | 2.10% (differs) | 0.30% (differs) | 0.31% (differs) | 0.06% (differs) | 0.01% (differs) | 1.50% (differs) |
| Maximum Rate | 6.20% | 7.60% (differs) | 9.00% (differs) | 7.50% (differs) | 5.76% (differs) | 10.00% (differs) | 8.50% (differs) |
| Taxable Wage Base | $8,000 | $9,000 (differs) | $12,000 (differs) | $8,500 (differs) | $34,200 (differs) | $7,000 (differs) | $9,500 (differs) |
| Most Favorable Schedule: Minimum Rate | 0.00% | 0.10% (differs) | 0.00% | 0.30% (differs) | 0.06% (differs) | 0.01% (differs) | 0.00% |
| Most Favorable Schedule: Maximum Rate | 5.40% | 5.40% | 9.00% (differs) | 7.50% (differs) | 5.76% (differs) | 10.00% (differs) | 7.50% (differs) |
| Least Favorable Schedule: Minimum Rate | 0.10% | 1.90% (differs) | 1.00% (differs) | 2.20% (differs) | 0.06% (differs) | 0.50% (differs) | 1.50% (differs) |
| Least Favorable Schedule: Maximum Rate | 6.20% | 7.40% (differs) | 10.00% (differs) | 13.50% (differs) | 5.76% (differs) | 10.00% (differs) | 7.50% (differs) |
| Employer Contributions as a Share of Total Wages | 0.08% | 0.22% (differs) | 0.37% (differs) | 0.18% (differs) | 0.28% (differs) | 0.15% (differs) | 0.51% (differs) |
| Employer Contributions as a Share of Taxable Wages | 0.56% | 2.21% (differs) | 1.62% (differs) | 1.33% (differs) | 0.64% (differs) | 0.96% (differs) | 2.40% (differs) |
| Trust Fund Solvency Ratio | 0.71 | 0.68 (differs) | 0.7 (differs) | 1.04 (differs) | 1.29 (differs) | 0.77 (differs) | 0.81 (differs) |
| New Employer Rate | 2.73% | 2.70% (differs) | 2.70% (differs) | 1.00% (differs) | 1.00% (differs) | 2.70% (differs) | 2.70% (differs) |
Unemployment Insurance Taxes: Experience Formulas and Charging Methods
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Experience Formula Based On | Benefits Ratio | Reserve Ratio (differs) | Reserve Ratio (differs) | Benefits Ratio | Reserve Ratio (differs) | Reserve Ratio (differs) | Reserve Ratio (differs) |
| Benefits Charged in Proportion to Base-Period Wages | No (most recent or principal employer) | Yes (differs) | No (most recent or principal employer) | Yes (differs) | Yes (differs) | Yes (differs) | Yes (differs) |
| Charged If Employee's Benefit Award Is Reversed | Yes | Yes | No (differs) | No (differs) | Yes | No (differs) | No (differs) |
| Charged for Reimbursements on Combined Wage Claims | No | Yes (differs) | No | Yes (differs) | Yes (differs) | No | Yes (differs) |
| Charged If Employee Left Voluntarily | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) |
| Charged If Employee Was Discharged for Misconduct | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) |
| Charged If Employee Refused Suitable Work | Yes | Yes | No (differs) | Yes | Yes | Yes | Yes |
| Charged If Employee Continues to Work Part-Time | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) |
Unemployment Insurance Taxes: Other UI Base Variables
| Variable | Virginia | District of Columbia | Kentucky | Maryland | North Carolina | Tennessee | West Virginia |
|---|---|---|---|---|---|---|---|
| Solvency Tax | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) |
| Taxes for Socialized Costs or Negative Balance Employers | Yes | No (differs) | No (differs) | No (differs) | No (differs) | No (differs) | Yes |
| Loan and Interest Repayment Surtaxes | No | Yes (differs) | Yes (differs) | No | No | Yes (differs) | Yes (differs) |
| Reserve Taxes | No | No | No | No | Yes (differs) | No | No |
| Surtaxes for UI Administration or Non-UI Purposes | No | Yes (differs) | Yes (differs) | Yes (differs) | No | No | No |
| Temporary Disability Insurance | No | No | No | No | No | No | No |
| Voluntary Contributions | No | No | Yes (differs) | No | Yes (differs) | No | Yes (differs) |
| Years to Qualify for Experience Rating | 1 | 3 (differs) | 3 (differs) | 2 (differs) | 2 (differs) | 3 (differs) | 3 (differs) |
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About the Authors
Janelle Fritts is a Senior Policy Analyst with the Tax Foundation’s Center for State Tax Policy. She is the lead researcher on the annual State Tax Competitiveness Index and serves as a resource to policymakers in their efforts to modernize and improve the structures of their state tax codes. Her work has been cited in The New York Times, the Associated Press, Bloomberg, and numerous state media outlets across the country.
Jared Walczak is a Senior Fellow at the Tax Foundation, where he spent five years as Vice President of State Projects, and president of Walczak Policy Consulting.
Nicole Fox is a Policy Analyst with the Center for State Tax Policy at the Tax Foundation, where she serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
Katherine Loughead is the Vice President of State Tax Policy at the Tax Foundation, where she oversees the state tax policy team’s research agenda and serves as a resource to policymakers in their efforts to modernize and improve the structure of their state tax codes.
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