Gross Receipts Tax in Virginia: Rates, Filing, and Disputes

Virginia’s gross receipts tax on businesses, formally the Business, Professional and Occupational License (BPOL) tax, is a local tax on the total revenue your business brings in, not on its profit. The state authorizes it and sets rate ceilings; each city, county, and town decides whether to impose it, at what rate within those caps, and how to administer it. Because it applies to gross receipts rather than net income, a business operating at a loss can still owe money.

Who Owes the Tax

Under Title 58.1, Chapter 37 of the Virginia Code, any county, city, or town may require a business license and levy a tax on gross receipts. Most urban and suburban jurisdictions do; some smaller or rural counties waive it. You become subject to BPOL in any locality where you maintain a definite place of business — an office, warehouse, storefront, or other location where you regularly operate. A company with locations in three counties can owe BPOL in all three, based on revenue attributable to each.

Small-Business Floors

State law shields smaller businesses from the percentage tax through gross receipts thresholds tied to local population:

In localities over 50,000 population, no license tax applies to businesses with gross receipts below $100,000.
In localities between 25,000 and 50,000 population, the floor is $50,000.
Localities under 25,000 are not bound by those specific thresholds and may set their own.¹

A business under the floor may still owe a flat license fee: up to $30 in localities under 25,000 population, and up to $50 in localities of 25,000 or more. When a locality charges the flat fee on a business, it cannot also charge the percentage tax on that same business’s receipts.²

Rate Caps by Business Type

Every licensable business falls into a statutory classification that sets the maximum rate per $100 of gross receipts. Localities can charge less than the cap but not more:

Contracting and construction for sale: $0.16 per $100.
Retail sales: $0.20 per $100.
Repair, personal, and business services, plus other businesses not otherwise listed: $0.36 per $100.
Financial, real estate, and professional services: $0.58 per $100.

Professional services carry the steepest rate. The gap is real: a consulting firm grossing $500,000 in a locality that taxes at the full $0.58 rate would owe $2,900, while a retailer with identical revenue at the $0.20 cap would owe $1,000.¹

Wholesalers sit outside this rate table. The rate limitations in § 58.1-3706 do not apply to wholesale businesses; their rates are governed separately under § 58.1-3716.¹

Getting the Classification Right

Classification follows your primary source of revenue, and errors are costly. A business with both retail sales and professional consulting income needs to separate those streams on its filing. If you don’t, the locality may apply the higher professional services rate to everything. Local revenue officers look at the nature of your services and your industry codes when making the call.

If you believe you have been placed in the wrong category, you can challenge the classification with your local Commissioner of the Revenue, who will review your business model and supporting documentation.³

What Counts as Gross Receipts

Gross receipts means everything your business takes in, with no deduction for cost of goods sold or operating expenses. The base is wider than net income, but Virginia carves out a meaningful list of exclusions:

Pass-through taxes: Virginia sales tax, local cigarette excise tax, and federal or state motor fuel excise taxes you collect and remit.
Returns and allowances granted to customers.
Loan proceeds you receive as a borrower, and the return of principal on loans you made as a lender.
Amounts from liquidating a debt or converting an asset when the underlying transaction was already taxed, such as factoring accounts receivable.
Return of your original cost basis when you sell a capital asset.
Rebates and purchase discounts on your own purchases. Incentives assigned to you for making sales to others still count as gross receipts.
Inventory withdrawn for your own use rather than for sale, and one-off sales of assets outside your regular inventory.
Passive investment income (interest, dividends, similar returns) not directly related to your licensed business, provided your business is not classified as a financial services firm. Interest on an ordinary business bank account qualifies; income from installment sales or other transactions in the normal course of business does not.⁴

Revenue Taxed in Another State

Receipts generated in another state or country where you or your owners pay an income-based tax can be deducted from your Virginia gross receipts, which avoids double taxation. You need documentation showing the out-of-state tax liability.⁴

Filing Deadline and Penalties

Most Virginia localities set March 1 as the annual deadline to file the BPOL renewal and pay the tax. If March 1 falls on a weekend or holiday, the deadline moves to the next business day. Many jurisdictions accept online filings and payments; paper submissions by mail or in person are still available.⁵

Miss the deadline and most localities apply a 10% penalty on the tax due. Interest then accrues on the unpaid balance. Rates vary by locality — some charge 10% per year, others 5% — and interest generally starts on the first day of the month after the missed due date.⁵

New businesses file based on a good-faith estimate of expected gross receipts for the remainder of the first calendar year; existing businesses report actual revenue from the prior year. Applications go through the local Commissioner of the Revenue or Director of Finance, and once approved, you receive a physical license to display at your place of business. If you close or move out of the jurisdiction, notify the local tax office promptly so future assessments stop.⁶

Disputing an Assessment

Virginia has a layered process for challenging BPOL bills, and the deadlines are strict.

For clerical or straightforward errors, ask the Commissioner of the Revenue for a correction. You must submit the request in writing within three years from the last day of the tax year in question, or within one year from the date of assessment, whichever is later.

For substantive disputes, Virginia law provides a formal administrative appeal. This route requires an “appealable event,” such as a tax increase, refund denial, a new assessment, or a classification determination you disagree with. File in writing within one year from the last day of the tax year or the date of the appealable event, whichever is later. A timely administrative appeal suspends collection on the disputed amount until a final determination, though the suspension can be lifted if the local Treasurer finds collection at risk, you fail to provide requested information, or the appeal is deemed frivolous.

If the Commissioner rules against you, you can appeal to the Virginia Tax Commissioner within 90 days of that determination.

1
Virginia Code Commission. Virginia Code 58.1-3706 – Limitation on Rate of License Taxes
2
Virginia Code Commission. 23VAC10-500-100 – Rates and Fees
3
Virginia Code Commission. Virginia Code 58.1-3700 – License Requirement
4
Virginia Code Commission. Virginia Code 58.1-3732 – Exclusions and Deductions From Gross Receipts
5
City of Richmond. Business, Professional, and Occupational License (BPOL) Tax
6
Fairfax County, Virginia. Understanding Business, Professional and Occupational License Tax