What Is Digital Personal Property Tax in Virginia?

Digital personal property tax in Virginia works on a split: the digital assets themselves (cryptocurrency, NFTs, tokens, software you own) are classified as intangible property and reserved for state taxation only, so no county or city can send you an annual property tax bill on them.¹ The physical equipment you use to hold, mine, or run those assets is tangible personal property, and your locality taxes it every year. Your transactions in digital assets are also taxed as income at both the federal and Virginia level.

Why Your Digital Assets Aren’t Taxed Locally

Virginia Code § 58.1-1100 segregates intangible personal property “for state taxation only,” with a narrow exception for merchants’ capital. Because the segregation is statutory, no Virginia county, city, or town has authority to assess an annual property tax on assets that exist only as data entries.¹

The statute does not name cryptocurrency or NFTs. It doesn’t need to. These assets have no physical form, they live as ledger entries, and nothing in Virginia’s tangible property categories pulls them in. No Virginia court or administrative ruling has reclassified digital-only assets as tangible personal property. The practical result: your Commissioner of the Revenue cannot place your Bitcoin holdings or NFT collection on a depreciation schedule.

Computer application software gets the same treatment. Virginia Code § 58.1-1101 defines it as computer instructions designed to be read by a computer, and classifies it as intangible.² If you buy software separately, it’s shielded from local property tax. If it’s bundled into the hardware price on a single invoice, localities often fold the whole purchase into the hardware’s assessed value. Keep software line items itemized at the point of sale.

The Hardware Side: What Your Locality Can Tax

Mining rigs, servers, networking gear, business desktops, and peripherals are tangible personal property. Virginia Code § 58.1-3503 puts programmable computer equipment used in business, and computer equipment used in a data center, into their own valuation categories, each assessed by a percentage of original cost or another method reasonably expected to reflect fair market value.³

You report the equipment’s original cost, including sales tax and shipping, not its current resale value. The Commissioner of the Revenue applies the locality’s depreciation schedule, and the assessed value drops each year until it hits the floor set locally.

Rates vary enormously across Virginia. Tangible personal property rates run from under $1.00 to over $9.00 per $100 of assessed value, with the widest spread at the county level and city rates generally sitting between $2.00 and $6.00.⁴ Virginia Code § 58.1-3506 also lets localities break out separate classifications, including programmable computer equipment used in a trade or business, internet service equipment, and computer equipment in a data center, and apply a lower rate than the general one.⁵ Whether your locality uses those options and at what rate is a local decision; check with your Commissioner of the Revenue.

Filing the Local Return

Every locality requires an annual personal property return filed with the Commissioner of the Revenue or Director of Finance. Deadlines are not uniform. Some jurisdictions use February 15, others April 15, others May 1.⁶⁷ Look yours up early in the year.

For each piece of equipment, pull together:

Original cost, including sales tax and shipping
Date placed in service at its current location
Physical location on January 1 (this fixes which locality taxes it)
Make, model, and description, so the assessor can tell a desktop from a mining rig

Most localities offer online filing; paper forms are still accepted. When a computer came bundled with software, separate the costs on the return. The software portion is intangible and should not be in the hardware basis. Invoices that already break out hardware and software line items make this straightforward; reconstructing the split years later rarely holds up with the assessor.

After filing, the locality mails a bill. Many Virginia jurisdictions split the payment into two installments due June 5 and December 5.⁸ Online portals typically accept credit cards, debit cards, and electronic checks, with convenience fees around 2% to 2.5% on credit card payments.⁹ Some localities take electronic checks for free.¹⁰

What Late Filing or Nonpayment Costs

Virginia Code § 58.1-3916 sets the penalty floor at 10% of the tax assessable or $10, whichever is greater, for either a late return or a late payment, capped at the total tax owed. Tangible personal property tax unpaid more than 30 days past due can carry a penalty of up to 25% of the amount owed.¹¹

Interest runs starting the day after taxes are due, at up to 10% per year. For the second and later years of delinquency, the rate can rise to the federal underpayment rate under IRC § 6621 or 10% annually, whichever is higher. The locality can also recover attorney or collection agency fees of up to 20% of the delinquent balance.¹¹

Skip the return entirely and the locality can issue a statutory assessment, estimating your property’s value and billing you. Those estimates tend to run high because the assessor has nothing to work from. Filing on time with accurate numbers is cheaper than fixing a statutory assessment after the fact.

What You Still Owe on the Income Side

Local property tax is only part of the picture. The IRS treats all digital assets as property, not currency, so every sale, exchange, or disposal of cryptocurrency, NFTs, or other digital assets is a taxable event that can produce capital gains or losses.¹²

Form 1040 and several other returns now carry a digital asset question. You can answer “No” only if you did not own any digital assets, held them without transacting, bought them with U.S. dollars without selling, or transferred between your own wallets without paying a transaction fee in digital assets.¹³

The IRS wants detailed records for each transaction: the type of asset, the date and time, the number of units, the fair market value in U.S. dollars at the time, and your cost basis.¹³ Mining income is taxable at fair market value on the date received, and if mining is a trade or business, net earnings also get hit with self-employment tax.¹² Underreporting carries an accuracy-related penalty of 20% of the underpayment under IRC § 6662, triggered by negligence or a substantial understatement (an underpayment exceeding the greater of 10% of the tax due or $5,000).¹⁴

Virginia taxes the same gains as ordinary income. There’s no preferential rate for long-term capital gains at the state level. Virginia’s top rate of 5.75% applies to taxable income over $17,000, so most meaningful digital asset gains land at that rate on top of the federal bill. Virginia conforms to federal adjusted gross income as the starting point, so what you report federally flows directly onto your state return, and losses offset gains the same way they do federally.

The upshot for recordkeeping: digital asset owners in Virginia document two things in parallel. Hardware invoices with software broken out separately, for the local return. A complete transaction log with dates, amounts, and dollar values at the time of each trade, for the federal and state income returns.

1
Virginia Code Commission. Virginia Code 58.1-1100 – Intangible Personal Property; Segregated for State Taxation
2
Virginia Code Commission. Virginia Code 58.1-1101 – Classification
3
Virginia Code Commission. Virginia Code 58.1-3503 – General Classification of Tangible Personal Property
4
Virginia Department of Taxation. TY 2023 Rates of County, City, Town, and Districts Levies
5
Virginia Code Commission. Virginia Code 58.1-3506 – Other Classifications of Tangible Personal Property
6
Fredericksburg, VA – Official Website. Tax / Filing Deadlines
7
Greene County, VA. Tax Dates
8
Henrico County, Virginia. Important Tax Dates
9
City of Roanoke, VA. Pay Taxes and Bills
10
Chesterfield County. Pay Your Taxes
11
Virginia Code Commission. Virginia Code 58.1-3916 – Counties, Cities, and Towns May Provide Dates for Filing
12
Internal Revenue Service. IRS Notice 2014-21
13
Internal Revenue Service. Digital Assets
14
Office of the Law Revision Counsel. 26 USC 6662 – Imposition of Accuracy-Related Penalty on Underpayments