Guidelines for the Virginia Disposable Plastic Bag Tax

Legislation enacted during the Regular Session of the 2020 General Assembly (House Bill 534 (2020 Acts of Assembly, Chapter 1022) and Senate Bill 11 (2020 Acts of Assembly, Chapter 1023) authorizes any county or city to adopt by ordinance the Virginia Disposable Plastic Bag Tax on disposable plastic bags provided to customers in grocery stores, convenience stores, and drugstores in the locality. The tax will be administered by Virginia Tax. A locality must provide a certified copy of the ordinance to the Tax Commissioner at least 3 months prior to the date the tax is to become effective.

Any county or city may impose the Virginia Disposable Plastic Bag Tax in the amount of 5 cents on each disposable plastic bag provided to purchasers by any grocery store, convenience store, or drugstore in the locality. The tax is due regardless of whether the retailer sells the bag to the customer or it is provided free of charge.

The Guidelines are available in the Guidance Documents section of the Virginia Tax website. For additional information or questions, contact the Virginia Tax Business Customer Service line at 804.367.8037.

View the Tax Guidelines 

Guidelines for the Application of the Retail Sales and Use Tax to Sales of Accommodations Facilitated by Accommodations Intermediaries Effective September 1, 2021, Senate Bill 1398 (2021 Acts of Assembly, Special Session I, Chapter 383) changes the application of the Retail Sales and Use Tax to sales of accommodations facilitated by accommodations intermediaries. The legislation makes similar changes to the local transient occupancy tax. Additionally, these changes will apply to the state imposed transient occupancy taxes that fund transportation purposes in certain localities under Va. Code § 58.1-1743 and Va. Code § 58.1-1744 because these taxes are administered by local governments in the same manner as their local transient occupancy taxes. Virginia Tax has issued guidelines to provide processes and procedures for implementing the provisions of Va. Code §§ 58.1-602, 58.1-603, and 58.1-612.2, relating to the Retail Sales and Use Taxation of accommodations, as required by Senate Bill 1398.  The Guidelines are available in the Guidance Documents section of the Virginia Tax website. For additional information or questions, contact the Virginia Tax Business Customer Service hotline at 804.367.8037. View the Tax Guidelines

2021 Legislative Summary Published

The 2021 Legislative Summary is now available. 

The Legislative Summary is published by Virginia Tax as a convenient reference guide to state and local tax legislation enacted by the 2021 Session of the General Assembly.

The Summary includes a general description of enacted legislation affecting:

• State taxes administered by Virginia Tax, and
• Local taxes for which Virginia Tax assists with administration, or on which Virginia Tax renders advisory assistance.

References to chapter numbers are to the corresponding chapters in the Acts of Assembly, which may be viewed at: https://lis.virginia.gov. Effective dates of the legislation vary and are set out in each description.

In general, legislation affecting taxes administered by other state agencies is not included in the Summary.

The Summary is intended to provide a synopsis of enacted legislation and is for informational purposes only. The Summary is not a substitute for the actual state law, local ordinances, or tax related regulations. 

View the Legislative Summary

If you have additional questions, please visit https://www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions or 804.367.8037 for business tax questions.

Virginia Interest Rates Stay the Same

Virginia Tax announces that Virginia's interest rates will stay the same for the third quarter of 2021. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the third quarter of 2021 are 3% for tax underpayments and 3% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the third quarter of 2021 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 21-7 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

Virginia's New Electronic Payment Requirement for Some Individual Income Taxpayers

Following an amendment to legislation approved by the Virginia General Assembly, some taxpayers may now be affected by a new requirement for certain tax payments. 

Effective for taxable years beginning on or after Jan. 1, 2021, taxpayers who make estimated tax payments must submit all of their income tax payments electronically if:

• Any estimated tax payment exceeds $2,500; or
• Any extension payment exceeds $2,500; or
• The total estimated income tax due in any taxable year exceeds $10,000.Taxpayers should refer to the estimated income tax instructions for details about how to compute the total estimated tax due.  

This applies to all payments made on or after July 1, 2021, and includes all payments for estimated taxes, extension payments and any other amounts due when a taxpayer files a return. 

Visit the Virginia Tax website for more information on individual income tax payment options.  

If you have questions, please call Virginia Tax Customer Service at 804.367.8031. 

Additional Retail Sales and Use Tax in Charlotte, Gloucester, Northampton and Patrick Counties in Virginia

Virginia Tax is announcing that effective July 1, 2021, a new 1% additional retail sales and use tax will be levied in Charlotte, Gloucester, Northampton, and Patrick counties in Virginia. The sales and use tax levied will total 6.3%, comprised of the 4.3% state tax, the 1% percent local option tax, and the 1% additional local tax.

Sales made on or after July 1, 2021 will be subject to the new tax rate. Items delivered to a purchaser and paid for on or after July 1, 2021 will be taxed at the 6.3% rate, regardless of when the property was ordered. The increased rate will not apply to property delivered prior to July 1, 2021, but paid for on or after July 1, 2021. Also, the increased rate will not apply when a taxable sale or lease payment is paid for in full prior to July 1, 2021, even though delivery may occur on or after July 1, 2021, or the paid-in-full lease payment covers a lease period beginning on or after July 1, 2021.  

The rate of tax on food purchased for home consumption and qualifying essential personal hygiene products is unaffected by the law change and will remain at the current 2.5% (1.5% state and 1% local) rate statewide.  

More information can be found in Tax Bulletin 21-6 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8037 for business tax questions.

Important Information Regarding Certain Filing and Payment Deadlines in Virginia: New Individual Income Tax Filing and Payment Deadline 

Individual income tax returns and payments required to be made with such returns for Taxable Year 2020 that were originally due May 1, 2021, are now due on or before May 17, 2021. As a result, no penalties will apply so long as a return is filed and full payment is made by May 17, 2021. In addition, pursuant to Virginia Tax's authority to waive the accrual of interest during a declared state of emergency in the commonwealth, no interest will apply so long as a return is filed and full payment is made by May 17, 2021. 

The new filing and payment deadline for certain Taxable 2020 returns applies to composite returns filed on behalf of nonresident owners. However, all other Virginia tax payment, withholding, and filing deadlines remain the same, including the requirement for calendar year filers to make their first estimated payments for Taxable Year 2021 by May 3, 2021.

More information can be found in Tax Bulletin 21-5 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

Effective March 11, 2021, Virginia House Bill 2185 and Senate Bill 1403 amend the Code of Virginia to add Va. Code § 58.1-609.14, providing a temporary exemption from the Retail Sales and Use Tax for qualifying purchases of personal protective equipment (PPE).

The exemption is only valid for qualifying purchases of PPE made on or after March 11, 2021, and prior to the expiration of the last executive order issued by Governor Northam related to the COVID-19 pandemic and the termination of the COVID-19 Emergency Temporary Standard and any permanent COVID-19 regulations adopted by the Virginia Safety and Health Codes Board. No refunds will be provided regarding purchases made prior to March 11, 2021, or after the expiration of the exemption.

Guidelines for the Retail Sales and Use Tax Exemption for PPE have been published to the Virginia Tax website. For additional information or questions, contact the Virginia Tax Business Customer Service hotline at 804-367-8037.

View the Tax Guidelines 

Important Information Regarding 2020 Virginia Income Tax Returns: Virginia's Conformity to the Internal Revenue Code Advanced to Dec. 31, 2020

Under emergency legislation enacted by the 2021 General Assembly, Virginia's date of conformity to the terms of the Internal Revenue Code advances from Dec. 31, 2019, to Dec. 31, 2020. This allows Virginia to generally conform to the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Consolidated Appropriations Act (CAA). 

However, it specifically deconforms from three provisions of the CARES Act that temporarily change limitations applicable to the net operating loss deduction, excess business losses and the business interest deduction. This legislation also deconforms from the provision of the CAA that permanently reduces the medical expense deduction threshold.

The legislation conforms to the federal tax exemption for Paycheck Protection Program (PPP) loan forgiveness and certain funding received under the Economic Injury Disaster Loan (EIDL) program. However, it partially deconforms from the provision of the CAA that allows taxpayers to claim a federal deduction for business expenses funded by forgiven PPP loan proceeds. Instead, the bill permits a deduction for Taxable Year 2020 of up to $100,000 for business expenses funded by forgiven PPP loan proceeds. In addition, the legislation fully deconforms from the provision of the CAA that allows taxpayers to claim a federal deduction for business expenses funded by certain EIDL funding proceeds.

The legislation also provides an individual and corporate income tax subtraction for Taxable Year 2020 for up to $100,000 of all grant funds received by a taxpayer under the Rebuild Virginia program.

Tax Bulletin 21-4 explains the conformity adjustments that may be necessary as a result of this legislation. 

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.

Virginia Interest Rates Stay the Same

Virginia Tax announces that Virginia's interest rates will stay the same for the second quarter of 2021. The underpayment and overpayment rates for Virginia taxes are 2% higher than the corresponding federal rates. Federal rates for the second quarter of 2021 are 3% for tax underpayments and 3% for tax overpayments by taxpayers other than corporations. Accordingly, the Virginia rates for the second quarter of 2021 will be 5% for tax underpayments (assessments) and 5% for tax overpayments (refunds).

Details about these interest rates can be found in Tax Bulletin 21-3 and in the Laws, Rules, and Decisions section of our website.  

View the Tax Bulletin

If you have additional questions, go to www.tax.virginia.gov, or contact us at 804.367.8031 for individual income tax questions and 804.367.8037 for business tax questions.