Which products and services require sales tax in Virginia?
Virginia taxes tangible personal property sold at retail. That’s the baseline. If you’re selling physical goods to end consumers, you’re collecting sales tax in most cases. The statewide rate is 4.3% plus local additions that bring most Richmond-area businesses to around 5.3%.
Most services are not taxable in Virginia. This surprises owners who’ve worked in other states where labor and services get taxed. You can charge for consulting, repairs, landscaping, cleaning, personal training, and most professional services without collecting sales tax. Virginia has historically focused on taxing goods, not labor.
There are exceptions. Lodging is taxable. Admission to entertainment venues is taxable. Some utilities and communications services have their own tax rules.
Tangible goods that are exempt include prescription medications, certain medical equipment, manufacturing equipment used directly in production, and items purchased for resale with a valid certificate.
Groceries get special treatment. Virginia eliminated the state sales tax on food for home consumption, though local taxes still apply at about 1%. Prepared food is different. A restaurant meal, a deli sandwich, or coffee from a café gets the full sales tax rate. The distinction is whether food is sold ready to eat versus ingredients you take home to prepare. Sales tax compliance for food service businesses requires tracking what you bought at reduced rates versus what you’re charging customers at full rates.
Digital products have gotten more attention from Virginia in recent years. Downloaded software, streaming services, and other digital goods are now taxable. If you’re selling digital products, you need to register and collect just like you would on physical inventory.
If you’re buying materials for resale, you provide a resale certificate to your supplier and skip the tax on those purchases. You collect when you sell to the final customer. This applies to retailers stocking inventory, restaurants buying food supplies, and contractors purchasing materials for installation projects.
Registration happens through Virginia Tax before you start collecting. Filing frequency depends on your sales volume. Most small businesses in Richmond file monthly or quarterly. Late filings come with penalties, so having a system for tracking collections and deadlines matters. Working with small business bookkeepers who understand Virginia’s rules helps you categorize transactions correctly and stay on top of filing dates.
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