Virginia corporate income tax is 6.0%. Does not conform to federal bonus depreciation. Virginia PTET was extended through January 1, 2027.
Key Planning Insight:
Virginia's PTET was extended through January 1, 2027 — a one-year extension enacted in 2025. The state does not conform to bonus depreciation. Virginia's top bracket kicks in at just $17,000 of taxable income — meaning most taxpayers pay the top rate.
Virginia-Specific Tax Strategies
These strategies are especially powerful or unique in Virginia. Click any strategy to learn more.
Virginia's PTET election allows pass-through entities to pay state income tax at the entity level. The entity-level payment is deductible federally, bypassing the $10,000 SALT cap for individual owners.
Section 179 allows businesses to deduct the full purchase price of qualifying equipment, vehicles, and software in the year of purchase rather than depreciating over time. The 2026 federal limit is over $1 million. Some states cap or limit Section 179 conformity — check your state rules.
S-Corp owners must pay themselves a "reasonable salary" subject to payroll taxes (15.3%), but remaining profits distributed as shareholder distributions avoid self-employment tax entirely. Optimizing the salary-to-distribution ratio is one of the most impactful tax strategies for business owners earning $60,000+ in net profit.
The R&D Tax Credit (IRC §41) provides a dollar-for-dollar reduction in federal tax liability for qualified research activities. Small businesses can apply up to $500,000/year against payroll taxes. Qualifying activities include developing new products, improving processes, and creating software.
Qualified Opportunity Zone (QOZ) investments allow you to defer and reduce capital gains taxes by investing in designated economically distressed areas. Gains invested in a Qualified Opportunity Fund (QOF) are deferred until 2026, and if held 10+ years, any appreciation on the QOZ investment is tax-free.
Choosing the right business structure is the single biggest tax decision you'll make. Here's what Virginia LLC and S-Corp owners need to know.
Virginia LLC Formation
Virginia LLCs are taxed as pass-through entities by default. All profits flow to your personal return and are taxed at 5.75%. Electing S-Corp status can significantly reduce your self-employment tax burden.
LLC vs. S-Corp in Virginia
Virginia offers a Pass-Through Entity Tax (PTET) election — a major advantage for LLC and S-Corp owners. By paying state income tax at the entity level, you bypass the $10,000 federal SALT deduction cap and deduct the full state tax bill on your federal return.
Top LLC Write-Offs in Virginia
Virginia LLC owners can deduct: business expenses (IRC §162), home office (IRC §280A), vehicle mileage (IRC §179), Section 179 equipment expensing, retirement contributions (Solo 401k or SEP-IRA), health insurance premiums, and business meals. Note: Virginia does not conform to federal bonus depreciation — an add-back on your state return may be required.
Virginia Business Tax Note
Virginia corporate income tax is 6.0%. Does not conform to federal bonus depreciation. Virginia PTET was extended through January 1, 2027.
These federal strategies apply to Virginia residents and business owners. Click any strategy to see full details, savings estimates, and eligibility requirements.
Common questions about Virginia LLC taxes, S-Corp elections, and business write-offs — answered by Uncle Kam's tax advisors.
Virginia's top marginal income tax rate is 5.75%. Business owners and self-employed individuals pay this rate on their net business income. Strategies like the S-Corp election, pass-through entity tax (PTET) election, and maximizing deductions can significantly reduce your effective Virginia tax rate.
The most powerful write-offs for Virginia LLC owners include: the S-Corp election to reduce self-employment taxes, Section 179 and bonus depreciation for equipment and real estate, the home office deduction, vehicle and mileage deductions, Solo 401(k) or SEP-IRA contributions, and business meals and travel. Virginia-specific strategies like the PTET election and state-specific credits can add further savings.
Yes. Virginia offers a pass-through entity tax election that allows S-Corps and partnerships to pay state income tax at the entity level. This is a powerful SALT workaround that lets business owners deduct state taxes on their federal return, bypassing the $10,000 SALT cap. Uncle Kam's tax advisors can help you determine if the Virginia PTET election is right for your business.
Virginia does not fully conform to federal bonus depreciation rules. You may need to add back bonus depreciation on your Virginia state return and depreciate assets over a longer schedule. However, Section 179 expensing may still be available up to Virginia's state cap. A tax advisor can help you navigate this.
For most Virginia business owners earning over $60,000 in net profit, electing S-Corp status can save $5,000–$20,000 per year in self-employment taxes. The right choice depends on your income level, Virginia's franchise or minimum tax requirements, and your business structure. Uncle Kam's advisors specialize in Virginia entity structuring — book a free call to get a personalized recommendation.
Self-employed individuals in Virginia can reduce state taxes by: maximizing business deductions (home office, vehicle, equipment), contributing to a Solo 401(k) or SEP-IRA, electing S-Corp status to reduce self-employment tax, using the PTET election if available, and timing income and deductions strategically. A Virginia-based tax strategy session with Uncle Kam can identify your biggest opportunities.
Real estate investors in Virginia benefit most from cost segregation studies (accelerating depreciation on commercial and rental properties), the 1031 exchange (deferring capital gains on property sales), bonus depreciation (if Virginia conforms), the short-term rental loophole, and real estate professional status (REPS). Virginia's specific tax rules can significantly impact your real estate ROI — get a free strategy review from Uncle Kam.
