Virginia payroll taxes for employers (2026)

Virginia payroll quirks worth knowing

The add-ons to the 2.5%

• An administrative fee of 0.05% of taxable wages, paid quarterly, under Appropriation Act Item 359 J.1. Regular rates were cut by 0.05% from January 1, 2025 to offset it.
• A pool cost charge that applies to every employer. We could not confirm the 2026 value.
• A 0.2% fund building charge that applies only when the trust fund is at or below 50%. We could not confirm whether it is on for 2026.

Check your VEC rate notice for the figure you actually owe. Experienced base rates range from 0.1% to 6.2%.

Income tax by bracket

Virginia withholds 2% on the first $3,000 of taxable income, 3% to $5,000, 5% to $17,000 and 5.75% above that (Va. Code 58.1-320). Supplemental pay can be withheld at a flat 5.75% when tax is also withheld from regular wages. Your return frequency depends on how much you withhold: quarterly under $100 a month, monthly from $100 to $1,000, and semi-weekly at $1,000 or more. There are no local income taxes.

Wage rules

The minimum wage is $12.77 in 2026, $13.75 from January 1, 2027 and $15.00 from January 1, 2028, with CPI indexing from 2029 (Va. Code 40.1-28.10). Tipped staff can be paid $2.13 in cash. A departing employee is paid on or before the day they would have been paid had they stayed (Va. Code 40.1-29(B)). Monthly pay is allowed for executive, administrative and professional staff and, by agreement, for employees earning above 150% of the state average weekly wage. Workers comp is required once you regularly employ more than 2 people in Virginia, and contractors must count subcontractors' workers.

Virginia employer payroll facts at a glance

How to register a business as a Virginia employer

1. Get an EIN from the IRS.
2. Register with the VEC online through iFile/iReg ("Register and File Online" on the VEC employers page). Mail registration is also accepted.
3. Register with Virginia Tax for income tax withholding.
4. Report new hires, rehires and independent contractors within 20 days of the start date (Va. Code 63.2-1946).
5. Arrange workers comp before you have a third regular employee.

Worked example for a $50,000 Virginia employee

Virginia's $8,000 base is low, so the state share stays small even with add-ons. Here are the lines we could confirm, with the uncertain ones shown separately:

Add the pool cost charge from your VEC notice to get your real total. Workers comp is separate; see workers comp pricing by industry. To see where Virginia ranks, open the SUTA rate table for all states, and check the 2026 minimum wages if you hire hourly staff in several states.

Virginia payroll services and PEOs

A full-service provider should apply your combined VEC rate, not just the 2.5% base, and should move you to monthly or semi-weekly deposits as your withholding grows. If you also have staff in Maryland, DC or North Carolina, you need multi-state payroll. Gusto's Plus plan covers multiple states for $80 a month plus $12 per person; its single-state Simple plan is $49 plus $6 (checked October 16, 2026). Compare more in our payroll software list.

Harbor Compliance (secondary) says Virginia requires PEOs to be licensed or registered; we have not confirmed the regulator or its list. Ask any PEO for proof, and compare them in PEO rankings with scores.