Our Dash of SALT Blog provides the most recent developments and changes in state and local tax regulations. Here are the latest updates for Virginia.
March 16, 2026
Virginia Lawmakers Debate Ending Data Center Sales Tax Exemption
Authored by: Emilia Jarrin and Penny Sweeting, CPA
Virginia lawmakers are currently debating whether to eliminate a long-standing sales tax exemption for data centers that applies to equipment and software purchases. The exemption, originally designed to attract investment, allows qualifying companies to avoid paying the state’s 5.3% sales tax and is estimated to cost the state $1.6 billion annually. The Virginia Senate has proposed ending the exemption as early as 2027, while the House has suggested keeping it but adding new requirements. Supporters of repealing the exemption argue that the data center industry is now well established in the Commonwealth and should contribute more tax revenue. Opponents warn that removing the incentive could slow future investment and economic growth in the state.
If you have questions about state sales tax exemptions, please reach out to a member of the Withum SALT Team.
November 5, 2025
Virginia: New Apportionment Guidance for Corporations With Non-Unitary Pass-Through Entity Interests
Authored by: Bonnie Susmano, JD, MBA and Joe Petrucci
The Virginia Department of Taxation has issued updated guidance on how corporate taxpayers should calculate apportionment when they hold a non-unitary ownership interest in a pass-through entity (PTE). This follows a 2024 Virginia Court of Appeals decision striking down the state’s prior blended apportionment method as unconstitutional when applied to non-unitary PTE income. Under the new approach, corporations must separately source their distributive share of income from non-unitary PTEs, rather than incorporating the PTE’s apportionment factors into the corporate numerator and denominator. The updated rules generally require corporations to exclude the PTE’s property, payroll, and sales factors from their own apportionment formula unless the PTE is part of the unitary group. Taxpayers with PTE ownership stakes should evaluate whether amended returns or revised apportionment calculations may be required going forward.
If you have questions about state apportionment, please reach out to a member of the Withum SALT Team.
May 13, 2025
Virginia Governor Signs Budget With Tax Rebates and Increased Standard Deduction
Authored by: Courtney Easterday, MSA and Joe Petrucci
The Virginia General Assembly enacted a biennial budget (H.B. 1600), signed by Governor Glenn Youngkin on May 2, 2025, that includes a one-time, $200 income tax rebate for single filers and $400 for joint filers. The budget also permanently increases the standard deduction to $8,750 for individuals and $17,500 for joint filers, extending increases originally set to expire in 2026. A proposal to expand and make the earned income tax credit permanent was excluded from the final version.
If you have questions about state tax legislation, please reach out to a member of the Withum SALT Team.
March 25, 2025
Virginia to Launch New Sales Tax Form
Authored by: Breea Boylan, CPA and Courtney Easterday, MSA
The Virginia Department of Taxation has introduced a new sales tax form, the ST-1, which will replace a multitude of the current sales tax forms and schedules beginning April 2025. The ST-1 will replace the ST-9, ST-8, ST-7, and the ST-6. The new ST-1 form consolidates schedules into one table. Filing sales tax in Virginia will generally stay the same; however, changes may be noticed with the layout, look, and order of some form fields.
If you have questions about state sales tax compliance, please reach out to a member of the Withum SALT Team.
November 25, 2024
Virginia Tax Ruling Clarifies Contractor Classification and Tax Obligations
Authored by: Courtney Easterday,MSA
In Ruling 24-97, the Virginia Department of Taxation upheld a use tax assessment for a taxpayer who provides installation, maintenance, and inspection services for fire safety systems. The Department assessed consumer use tax on untaxed purchases of tangible personal property used in these services.
The Commissioner determined that the taxpayer had been incorrectly classified as a retailer during the audit period. Instead, they should have been classified as a contractor, as the tangible personal property used in their services became part of real property upon installation. Consequently, the Department upheld the use tax assessment, emphasizing the importance of proper classification in tax assessments.
If you have questions about sales tax classifications, please reach out to a member of the Withum SALT Team.
Disclaimer: Please note this is the information that is readily available at this time, it is subject to change so please consult your Withum tax advisor.
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