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Sales and Use Tax Changes Effective July 1, 2013

House Bill 2313, enacted by the 2013 General Assembly on April 3, makes several important changes to Virginia tax law.  In addition to increasing the state sales tax rate statewide and in specific regions, the bill creates a Regional Transient Occupancy Tax, and imposes a Regional Congestion Relief Fee on the recordation of conveyances of real estate in certain localities.

The changes to taxes administered by the Virginia Department of Taxation, as well as the locally administered Regional Transient Occupancy Tax, are summarized on this page. 

Webinar

This broadcast, which was recorded on June 7, 2013, contains references to the Counties of Gloucester and Surry being in the list of localities included in the Hampton Roads Region.  As explained in Tax Bulletin 13 - 8, published on June 13, 2013, Gloucester County and Surry County are not part of the Hampton Roads Region, and are not subject to the additional sales and use tax rate increase of 0.7 percent.

YouTube Videos

The department has created the following videos to provide an overview of the changes to our Online Services that result from the Sales and Use Tax changes.  These videos will open in a new window.

Helpful Resources

Retail Sales and Use Tax

Rate Increase - Statewide and Regional

Effective July 1, 2013, the Retail Sales and Use Tax rate for most purchases will increase to 5.3 percent statewide.  In addition to the statewide increase, there is a 0.7 percent increase in the localities that make up the Northern Virginia and Hampton Roads regions.  The tax on purchases of qualifying food for home consumption remains unchanged.

Similarly, the Vending Machine Sales Tax rate will increase to 7 percent in the localities that make up the Northern Virginia and Hampton Roads regions, and 6.3 percent throughout the rest of Virginia.

These rate increases are the result of the state sales tax increasing 0.3 percent statewide, with an additional 0.7 percent increase in Northern Virginia and Hampton Roads.   Local sales tax remains 1 percent statewide. 

Rates Effective July 1, 2013:

Retail Sales and Use Tax

  State Tax Local Tax Total State & Local Tax
Northern Virginia 5% 1% 6%
Hampton Roads 5% 1% 6%
Elsewhere throughout Virginia  4.3% 1% 5.3%

Vending Machine Sales Tax

  State Tax Local Tax Total State & Local Tax 
Northern Virginia 6% 1% 7%
Hampton Roads 6% 1% 7%
Elsewhere throughout Virginia  5.3% 1% 6.3%

Dealers will begin collecting the tax at the new rate beginning July 1, 2013, with the first reporting and payment occurring on the July 2013 return, due on August 20, 2013 (for quarterly filers, with the return for the quarter ending September 2013, due October 21, 2013).  

Northern Virginia Region

The regional rate increase in Northern Virginia applies to the Cities of Alexandria, Fairfax, Falls Church,  Manassas, and Manassas Park, and the Counties of Arlington, Fairfax, Loudoun, and Prince William.

Hampton Roads Region

The regional rate increase in Hampton Roads applies to the Cities of Chesapeake, Franklin, Hampton, Newport News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia Beach and Williamsburg, and the Counties of Isle of Wight, James City, Southampton and York.

Tax Bulletin 13 - 8, issued June 13, 2013, removes the Counties of Gloucester and Surry from the list of affected localities in the Hampton Roads Region. These counties are not located in the Hampton Roads Planning District (Planning District 23).

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Affected Forms and Filers

The changes imposed under the provisions of House Bill 2313 affect most Virginia Retail Sales and Use Tax filers, and will result in revisions to the following forms, beginning with the month of July 2013:

Form ST-9 Retail Sales and Use Tax Return
Form ST-9 CO   Retail Sales and Use Tax Return for Consolidated Filers
Form ST-8 Out-of-State Dealer’s Use Tax Return
Form ST-7 Consumer’s Use Tax Return
Form ST-6 Direct Pay Permit Sales and Use Tax Return
Form ST-50 Temporary Sales Tax Certificate/Return
Form VM-2 Vending Machine Dealer’s Sales Tax Return
Form PF-1 Public Facilities Sales Tax Return

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Changes to Dealer's Discount Factors

Along with the rate changes, the factors for calculating the Dealer’s Discount for timely filing and payment have been adjusted.  The new factors will be used on returns beginning with the return for the month of July 2013 (for quarterly filers, the return for the quarter ending September 30, 2013).  Be sure to check the updated forms for additional details.

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Northern Virginia Transient Occupancy Tax

Effective July 1, 2013, a new 2 percent state transient occupancy tax will be imposed in the Northern Virginia Region.  The new regional transient occupancy tax will be a state tax, but it will be administered by the locality in which the room or space is located in the same manner as its current local transient occupancy tax.  Affected localities are the Cities of Alexandria, Fairfax, Falls Church, Manassas and Manassas Park, and the Counties of Arlington, Fairfax, Loudon and Prince William.

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Real Estate Recordation Tax

Regional Congestion Relief Fee

House Bill 2313 imposes a regional congestion relief fee on the recording of any deed or instrument conveying real property that is situated in a locality included in the Northern Virginia Region when the consideration or value of the interest in such property, whichever is greater, equals or exceeds $100.  The fee, which is to be paid by the seller (grantor), is imposed on the consideration or value in addition to any other required recordation taxes and fees at the rate of $0.15 per $100 or fraction thereof.  Affected localities are the Cities of Alexandria, Fairfax, Falls Church, Manassas, and Manassas Park, and the Counties of Arlington, Fairfax, Loudoun, and Prince William. 

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Last Updated 8/21/2013 13:18

 

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