What payroll taxes do Virginia employers need to pay?
Virginia employers pay federal payroll taxes plus Virginia unemployment insurance. Compared to other states, Virginia keeps things relatively straightforward. No state disability insurance or paid family leave programs to deal with.
On the federal side, you pay Social Security tax at 6.2% on wages up to the annual cap and Medicare tax at 1.45% on all wages. Those rates match what gets withheld from employee paychecks, so the combined FICA cost is 15.3% split evenly between you and your employees. Federal unemployment tax adds another 0.6% on the first $7,000 per employee, assuming you pay Virginia unemployment on time and qualify for the credit.
Virginia unemployment insurance is the main state-level employer tax. Rates range from around 0.1% to 6.2% depending on your experience rating. New employers typically start near 2.5%. The tax applies to the first $8,000 of wages per employee each year. Your rate adjusts annually based on how many former employees have filed unemployment claims against your account.
Budget roughly 8% to 10% of wages for employer payroll taxes when planning labor costs. The exact number depends on your unemployment rate and whether any employees earn above the Social Security wage base.
You also withhold federal and state income taxes from employee paychecks. That money belongs to your employees, not you. You’re just responsible for collecting it and getting it to the right agencies on time. Miss a deposit deadline and penalties add up fast.
Register with the Virginia Employment Commission when you bring on your first employee. They assign your unemployment rate and set up quarterly reporting. The VEC sends updated rate notices in late December each year. Watch for yours and update your payroll system before January paychecks go out.
Common mistakes include depositing payroll taxes late, running the old unemployment rate into the new year, and forgetting to update withholding when employees submit new W-4s. If you’re handling payroll yourself while running the business, these details slip through the cracks. Many small businesses in the Richmond area find that working with bookkeeping services in Richmond helps them stay on top of payroll compliance without it becoming another thing competing for their attention.
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