Virginia Business Taxes for LLCs
Find out what taxes your Virginia LLC needs to pay — pass-through income tax, self-employment tax, sales tax, payroll taxes, and more. Plain-English guide with state-specific details.
Bizee Editorial Staff
Editorial Team
Virginia LLC tax facts at a glance
Filing fee: $100 (Articles of Organization, online)
Processing time: 1–2 business days (online)
State agency: Virginia State Corporation Commission (SCC)
Annual report due: Annual registration fee due by the last day of the month in which the LLC was formed
State tax rate: No LLC-level income tax; owners pay Virginia individual income tax at graduated rates up to 5.75%. Corporate income tax rate is 6% if LLC elects C corporation status.
How a Virginia LLC is taxed
A Virginia LLC doesn't pay income tax at the business level by default. Instead, profits pass through to the owners, who report them on their personal tax returns and pay federal and Virginia income tax there. This pass-through structure is the default for single-member and multi-member LLCs alike.
Most Virginia LLC owners end up paying 5 types of tax: federal income tax, self-employment tax, Virginia individual income tax, and — depending on the business — sales tax and payroll taxes. The mix depends on how your LLC is structured, whether you have employees, and what you sell.
- Federal income tax on LLC profits (pass-through to owners)
- Self-employment tax on net earnings (15.3% on the first $176,100 in 2025, 2.9% above that)
- Virginia individual income tax on pass-through income
- Virginia sales and use tax if you sell taxable goods or services
- Payroll taxes if you have employees
Virginia state income tax for LLCs
Virginia taxes LLC income at the owner level, not the business level. Owners report their share of LLC profits on their Virginia individual income tax return and pay tax at graduated rates ranging from 2% to 5.75%. There's no separate LLC-level state income tax.
Multi-member LLCs file a Virginia pass-through entity return to report the LLC's income and allocate it among members. Each member then reports their allocated share on their own Virginia return. Virginia follows the federal tax classification for LLCs, so the state treatment mirrors how the IRS treats your LLC.
Virginia doesn't have a franchise tax on LLCs, but it does charge an annual registration fee to keep your LLC in good standing with the State Corporation Commission. That fee is separate from income tax.
Virginia sales and use tax
Virginia has a statewide sales tax rate of 4.3%, plus a 1% local option tax, for a combined base rate of 5.3% in most of the state. Some localities — including Northern Virginia and Hampton Roads — add an additional 0.7%, bringing the rate to 6% in those areas. If your LLC sells taxable goods or certain services, you need to collect and remit sales tax.
Register with the Virginia Department of Taxation before you start collecting sales tax. You can register online through the Virginia Tax portal. Once registered, you'll file sales tax returns on a monthly, quarterly, or annual schedule depending on your sales volume. Missing a filing can put your business out of good standing, so check your assigned filing frequency when you register.
Federal income tax and self-employment tax
LLC owners pay federal income tax on their share of business profits at their individual tax rate. They also pay self-employment tax — which covers Social Security and Medicare — on net earnings from the business. Self-employment tax is 15.3% on the first $176,100 of net earnings in 2025, and 2.9% on anything above that.
Because no employer withholds taxes from an LLC owner's income, you'll likely need to make quarterly estimated tax payments to both the IRS and the Virginia Department of Taxation. Getting behind on estimated payments can mean an underpayment penalty at tax time — not a large one, but an avoidable one.
Payroll taxes for Virginia LLCs with employees
If your Virginia LLC has employees, you take on payroll tax responsibilities at both the federal and state level. You'll withhold federal income tax, Social Security, and Medicare from employee wages, and you'll match the Social Security and Medicare contributions as the employer. Federal payroll tax deposits and quarterly Form 941 filings go to the IRS.
On the Virginia side, register with the Virginia Department of Taxation to withhold state income tax from employee wages. You'll file quarterly withholding returns using Form VA-5. You also need to register with the Virginia Employment Commission (VEC) for unemployment insurance tax, which applies to the first $8,000 of each employee's wages per year.
Payroll tax compliance has more moving parts than most new business owners expect. A tax professional can help you set up withholding correctly from the start — it's much easier than correcting mistakes after the fact.
Electing corporate tax status
A Virginia LLC can elect to be taxed as a C corporation or an S Corporation instead of using the default pass-through treatment. These elections change how the business is taxed at both the federal and state level, and they're worth understanding if your LLC is growing or retaining profits.
C corporation election
File IRS Form 8832 to elect C corporation tax treatment. Once you do, Virginia treats your LLC as a corporation for state tax purposes too. That means the LLC itself pays Virginia corporate income tax at a flat 6% rate on income apportioned to Virginia, and you file Form 500 with the Virginia Department of Taxation. Owners then pay personal income tax again on any dividends — so profits can be taxed twice. Most small LLCs don't benefit from this structure, but it can make sense in specific situations. Talk to a tax professional before making this election.
S corporation election
File IRS Form 2553 to elect S corporation tax treatment. Profits still pass through to owners, but owners who work in the business must pay themselves a reasonable salary as a W-2 employee. The salary is subject to payroll taxes; distributions above the salary are not. This can reduce self-employment tax for profitable LLCs. Virginia follows the federal S corporation treatment, so there's no separate state election required.
FAQ
Yes. Virginia has a statewide sales tax. The base combined rate is 5.3% in most of the state — 4.3% state plus 1% local. Northern Virginia and Hampton Roads add an extra 0.7%, bringing those areas to 6%. If your LLC sells taxable goods or certain services, you need to register with the Virginia Department of Taxation, collect sales tax from customers, and file returns on the schedule Virginia assigns you.
Yes. Virginia has a state income tax, but LLC owners pay it at the individual level, not the business level. Profits pass through to owners, who report their share on their Virginia individual income tax return. Rates are graduated from 2% to 5.75%. There's no separate LLC-level income tax in Virginia.
No. Virginia doesn't have a franchise tax on LLCs. Virginia does charge an annual registration fee to keep your LLC in good standing with the State Corporation Commission, but that's a registration fee, not a franchise tax. The amount depends on your LLC's authorized shares or membership structure.
Yes, in most cases. LLC owners who expect to owe $150 or more in Virginia income tax for the year need to make quarterly estimated payments to the Virginia Department of Taxation. You'll also make quarterly estimated payments to the IRS for federal income tax and self-employment tax. Missing these payments doesn't mean a large penalty, but it does mean a bill at tax time that could have been spread out.
It depends on how your LLC is taxed. By default, there's no business-level tax rate — profits pass through to owners, who pay Virginia individual income tax at graduated rates from 2% to 5.75%. If your LLC elects C corporation status, the LLC itself pays Virginia corporate income tax at a flat 6% on income apportioned to Virginia. S corporation elections keep pass-through treatment but require owners who work in the business to pay themselves a reasonable salary.
Generally, no. A standard Virginia LLC doesn't pay corporate income tax. The default pass-through structure means the LLC itself isn't taxed — owners pay individual income tax on their share of profits. The exception is if your LLC files IRS Form 8832 to elect C corporation tax treatment. In that case, Virginia treats the LLC as a corporation and taxes it at the 6% corporate income tax rate, and the LLC files Form 500 with the Virginia Department of Taxation.
