Effective October 1, 2020, the sales and use tax levied in the Central Virginia Region will be 6.0 percent, an increase of .7 percent over the existing 5.3 percent rate. The localities affected include the City of Richmond and the Counties of Charles City, Chesterfield, Goochland, Hanover (including the Town of Ashland), Henrico, New Kent, and Powhatan (Planning District 15). The General Assembly imposed a new regional state sales tax of 0.7 percent for the Planning District 15 localities to fund transportation needs within the region.
Background
The Virginia retail sales and use tax is imposed statewide at a total combined rate of 5.3 percent. The tax consists of the 4.3 percent state tax and the 1.0 percent local option tax. The Northern Virginia and Hampton Roads regions previously added a 0.7 percent regional tax in 2013 to fund transportation. Further, the City of Williamsburg and the Counties of James City and York (the “Historic Triangle”) added a one percent “Historic Triangle tax” in 2018. The rate of the tax in these three localities totals 7.0 percent, comprised of the 4.3 percent state tax, the 0.7 percent Hampton Roads regional tax, 1.0 percent Historic Triangle tax, and the 1.0 percent local option tax. Effective July 1, 2020, the General Assembly allowed Halifax County to add an additional one percent local sales and use tax.
New Regional Tax in Planning District 15
Sales made in Planning District 15 on or after October 1, 2020 will be subject to the new tax rate. Items delivered to a purchaser and paid for on or after October 1, 2020 will be taxed at the 6.0 percent rate, regardless of when the property was ordered. The increased rate will not apply to property delivered prior to October 1, 2020, but paid for on or after October 1, 2020. Also, the increased rate will not apply when a taxable sale or lease payment is paid for in full prior to October 1, 2020, even though delivery may occur on or after October 1, 2020, or the paid-in-full lease payment covers a lease period beginning on or after October 1, 2020.
Sourcing Rules
For intrastate sales, the local option sales tax is generally sourced to the city or county of the place of business of the dealer collecting the tax. In-state dealers should collect the Central Virginia regional tax on sales made in places of business located within Planning District 15, even if the goods are delivered outside of Planning District 15. Likewise, in-state dealers not located within Planning District 15 should not collect the Central Virginia regional tax, even if the goods are delivered into Planning District.
When tangible personal property is purchased remotely (by telephone, Internet, or mail order) from an in-state dealer with a place of business in Virginia, the sale is sourced to the location in which the order was first taken, even if the goods are ultimately delivered to the Customer at another location.
Remote sellers and marketplace facilitators that are registered to collect Virginia sales tax will collect the local option sales tax for goods delivered to addresses within Planning District 15
The local option sales tax does not apply to food purchased for home consumptions, nor to essential personal hygiene products.
Please let us know if you need any additional information about Virginia Sales Tax. For more information on this rate change, please see Tax Bulletin 20-8.
