Virginia’s special taxes are the levies that sit outside ordinary state income tax and standard real property tax: additional assessments on commercial property inside designated service districts, one-time recordation and grantor taxes charged when real estate changes hands, a local Business, Professional, and Occupational License (BPOL) tax on gross receipts, and a short list of industry excise taxes on things like timber, soft drinks, and peanuts. Each has its own statutory basis, its own payer, and its own trigger, and the amounts can be meaningful if you’re caught unprepared.
Special Taxing District Assessments
Any Virginia locality can create a service district by ordinance under Va. Code § 15.2-2400 and layer an additional tax on real property inside a defined boundary to pay for infrastructure that benefits that area.1Virginia Code Commission. Virginia Code 15.2-2400 – Creation of Service Districts If a highway widening or transit extension primarily serves a commercial corridor, the properties in that corridor shoulder the cost.
The clearest examples sit in Northern Virginia. Owners of commercial and industrial property along the Route 28 corridor in Fairfax County pay a separate assessment to fund highway improvements, with a 2026 proposed rate of $0.120 per $100 of assessed value and a statutory cap of $0.125. The Silver Line extension produced two more districts: Fairfax commercial owners pay $0.090 per $100 in the Phase 1 district and $0.140 per $100 in the Phase 2 district,2Fairfax County. Real Estate Tax Rates and Loudoun County authorizes a maximum Phase 2 rate of $0.20 per $100.3Loudoun County, VA. Dulles Rail Service Districts
Residential property, including apartments and senior care facilities, is not subject to these levies. The assessments appear as separate line items on the annual real estate bill and carry the same enforcement weight as the base property tax, including the ability to lien the property. The obligation runs with the deed, so a buyer evaluating a commercial site in one of these corridors should price the district assessment into carrying costs.
Recordation and Grantor Taxes at Closing
Two one-time taxes hit when a Virginia deed is recorded. The state recordation tax is $0.25 per $100 (or any fraction) of the greater of purchase price or actual value.4Virginia Code Commission. Virginia Code 58.1-801 – Deeds Generally; Charter Amendments On a $400,000 purchase, that is $1,000. Most localities add their own recordation tax at one-third of the state rate, roughly $0.083 per $100,5Virginia Code Commission. Virginia Code 58.1-814 – City or County Recordation Tax which pushes the combined figure on that same purchase to about $1,333. The buyer typically pays at settlement.
The seller pays the grantor tax, set at $0.50 per $500 of sale price, which works out to $1.00 per $1,000.6Virginia Code Commission. Virginia Code 58.1-802 – Additional Tax Paid by Grantor; Collection The statute puts the legal burden on the grantor, though a contract can shift it. The clerk of the circuit court collects at recordation and will not record the deed until the tax is paid in full.
Sellers in Northern Virginia and Hampton Roads owe an additional regional congestion relief fee of $0.10 per $100 of sale price on top of the grantor tax.7Virginia Code Commission. Virginia Code 58.1-802.4 – Regional Congestion Relief Fee On a $500,000 sale, that adds $500. The statute carries a contingent expiration, so confirm it’s still in force at the time of your transaction.
What You Can and Cannot Deduct Federally
These charges mostly don’t help you on your federal return. IRS Publication 530 lists transfer taxes, including recordation and grantor taxes, as items that cannot be deducted as real estate taxes. Buyers add recordation taxes to the property’s cost basis instead, which only matters at a future sale. Special district assessments for local benefits are likewise not deductible as real estate taxes;8Internal Revenue Service. Publication 530, Tax Information for Homeowners the IRS treats them as charges that increase the value of specific property. Standard annual property tax stays deductible, subject to the federal cap on combined state and local tax deductions.
BPOL: The Local Business License Tax
If you run a business in Virginia, you likely owe BPOL to the city or county where you operate. It’s a tax on gross receipts, not profits, so a business can owe it in a losing year. Both the license filing and payment are due annually by March 1.9Virginia Code Commission. Virginia Code 58.1-3700 – License Requirement
State law caps the rates localities may charge under Va. Code § 58.1-3706. Financial, real estate, and professional services top out at $0.58 per $100 of gross receipts. Repair, personal, and business services are capped at $0.36 per $100. Retail is capped at $0.20 per $100. Contracting is capped at $0.16 per $100. Wholesalers fall under a separate section and are not bound by these caps.10Virginia Code Commission. Virginia Code 58.1-3706 – Limitation on Rate of License Taxes Many localities tax below the ceiling, so check your jurisdiction’s actual schedule.
Who Actually Owes BPOL
A locality can levy BPOL only on businesses with a definite place of business within its borders. A business without a definite place of business anywhere owes BPOL where the owner resides.11Virginia Code Commission. Virginia Code 58.1-3703.1 – Uniform Ordinance Provisions A home office can qualify, so remote and home-based operators are not automatically exempt. Contractors and itinerant merchants owe BPOL whether or not they maintain a fixed location.
Small businesses often fall below the threshold. Localities with populations above 50,000 must exempt businesses with gross receipts under $100,000, and localities between 25,000 and 50,000 must exempt those under $50,000.12Legal Information Institute. 23 Virginia Administrative Code 10-500-100 – Rates and Fees Smaller localities set their own thresholds and sometimes waive the fee for micro-businesses.
Operating without the required license is a misdemeanor, and skipping the license does not erase the tax. Filing a false statement on a BPOL application is also a misdemeanor.9Virginia Code Commission. Virginia Code 58.1-3700 – License Requirement Local tax officials can audit records to verify reported receipts.
Industry Excise Taxes
Virginia also levies narrower excise taxes that most residents never encounter.
The forest products tax applies to timber harvested in the Commonwealth. Pine lumber is taxed at $1.15 per 1,000 board feet, and hardwood, cypress, and other species at $0.225 per 1,000 board feet, with a per-ton election available.13Virginia Code Commission. Virginia Code 58.1-1604 – Tax Rates
The soft drink excise tax falls on wholesalers and distributors of carbonated soft drinks, not consumers. It is a flat annual fee on a tiered gross receipts schedule, starting at $50 for distributors under $100,000 in receipts and reaching $33,000 for those above $50 million.14Virginia Code Commission. Virginia Code 58.1-1702 – Tax Levied
The peanut excise tax applies to peanuts grown and sold in Virginia for processing, at $0.25 per 100 pounds through June 30, 2026, collected only once regardless of resale.15Virginia Code Commission. Virginia Code 3.2-1905 – Levy of Excise Tax The Department of Taxation administers these industry levies and enforces reporting deadlines.