Tax & Accounting Blog

Virginia Legislators Approve Sales Tax Increase and More

ONESOURCE, Sales and Use Tax, Sales Tax Calculation, State Reporting March 20, 2013

In an effort to raise an estimated $880 million in additional funds per year, the Virginia State Legislature has passed a bill making the following tax changes (among a few others not listed) effective July 1, 2013, pending the Governor’s approval:

The state sales and use tax will increase from 5.0% to 5.3%.
An additional 0.7% sales tax will be imposed by the state in the counties and cities within the Northern Virginia
Transportation Authority and the Hampton Roads Region, except on purchases of groceries.
The tax commissioner will be required to give sellers 30 days notice for local sales tax changes, and that said changes may only become effective on the first day of a calendar quarter.
Sales of aircraft and watercraft will be taxed at 2.0%, with a maximum tax of $1,000.
The $0.175 gasoline tax will be repealed in favor of a 3.5% wholesale gasoline tax. The wholesale gasoline tax will be computed and modified based on the average wholesale price every January 1st and July 1st.
The $0.175 tax on diesel will also be repealed in favor of a 6.0% wholesale diesel tax, which will be computed and modified the same as the gasoline wholesale tax.
The existing 2.1% gasoline wholesaler tax levied in the Northern Virginia Transportation Authority region will expand to the Hampton Roads region.
A 3.0% hotel tax will be added to existing hotel taxes in the Northern Virginia Transportation Authority area.
Tolls will be prohibited on Interstate 95 south of Fredericksburg without further approval by the Legislature.