How does Virginia state income tax and unemployment insurance work in 2026?
Virginia taxes income on four graduated brackets, topping out at 5.75% over $17,000 in 2026. Employers also fund unemployment insurance on an $8,000 wage base at a 2.50% new-employer rate.
· Virginia, United States guide
Illustration · Richmond, Virginia
Virginia's income tax has four brackets, from 2% to 5.75%. The top rate kicks in at just $17,000 of taxable income, so your salaried hire pays 5.75% on the bulk of every pay cheque. The graduated brackets are gentler on paper than in practice.
Your employer cost sits in two boxes. State withholding follows the bracket formula, and separately-paid bonuses can be withheld at a flat 5.75%. US hires also draw a federal stack on top. Virginia wage and overtime rules sit in a separate guide. Unemployment insurance runs on an $8,000 wage base at a 2.50% new-employer rate, then shifts to experience rating between 0.10% and 6.20%.
Does Virginia have a state income tax in 2026, and what are the brackets?
Yes. Virginia levies a graduated income tax with four brackets in 2026: 2% up to $3,000, 3% to $5,000, 5% to $17,000, then 5.75% above that.
The brackets are the same for single and joint filers, with a standard deduction of $8,750 for single filers and $17,500 for joint filers in 2026.
The bracket that catches you is how low the top rate starts. Hire a salaried employee in Virginia and they clear $17,000 of taxable income before the first month is out, so they pay 5.75% on most of their cheque from day one. The four-bracket structure reads softer than it behaves: Virginia runs close to a flat 5.75% state for ordinary salaries.
The thresholds are unchanged for 2026, but the higher standard deduction of $8,750 single and $17,500 joint is set to sunset after tax year 2026 and revert lower unless the General Assembly extends it. You register for withholding with Virginia Tax, collect a Form VA-4 from each employee, and reconcile annually on Form VA-6. Compare how the brackets work next door in North Carolina state income tax or Maryland state income tax, where county surtaxes add another layer.
How do you withhold Virginia tax on wages and bonuses?
Regular wages are withheld using the graduated bracket formula through Virginia Tax's withholding tables, after the employee's VA-4 exemptions and the built-in standard deduction.
Supplemental wages such as bonuses paid separately can be withheld at a flat 5.75% when tax was already taken from regular wages, with no exemption allowance applied.
Pay the bonus separately and you withhold a flat 5.75% on it, the same as the top marginal rate, with no VA-4 exemptions applied. Fold the bonus into the regular pay cheque and you withhold on the total using the bracket formula and the employee's VA-4 allowances. Most payroll systems default to the flat method on separately-paid bonuses because it reconciles cleanly.
The method you choose has to be applied consistently, because the annual VA-6 reconciliation with Virginia Tax has to tie out either way. One simplifying advantage: Virginia has no local or city income tax layered on top, so you withhold only at the state level. That keeps the withholding side cleaner than neighbours like Maryland, where counties add their own levy on top. The filing frequency Virginia Tax assigns you, monthly, quarterly, or seasonal, depends on how much you withhold each period. If your Virginia payroll also touches Virginia leave obligations, those run through a separate employer account.
What is Virginia's unemployment insurance wage base and rate for 2026?
Virginia's UI taxable wage base is $8,000 per employee for 2026, one of the lowest nationally. New employers pay a 2.50% base rate plus administrative add-ons, and a separate 0.05% administrative fee on taxable wages.
Once an employer has enough history, it moves onto an experience rate set by its own claims, ranging from 0.10% to 6.20%.
Your 2026 UI wage base is $8,000 per employee. You pay new-employer base rate 2.50%. Once experience-rated you pay between 0.10% and 6.20%, tracked to your own claims. File quarterly on Form FC-20 via the VEC employer portal.
On top of the tax rate, a separate administrative fee of 0.05% of taxable wages is assessed and paid quarterly. On the $8,000 base that is about $4.00 per employee per year. It cannot be deducted from employee wages.
Source: Virginia Employment Commission, unemployment tax for employers · Appropriation Act, Item 359 J.1
Your UI cost per Virginia head is capped at $8,000 per year, one of the lowest wage bases nationally. Pay above that threshold and the UI meter stops, regardless of salary. You file quarterly on Form FC-20 through the VEC employer portal, and Va. Code Title 60.2 governs coverage, rates, and appeals.
One line that is easy to miss sits outside the UI rate entirely. Since 1 January 2025 the Appropriation Act, Item 359 J.1 has assessed a separate administrative fee of 0.05% of taxable wages, paid quarterly into the Special Unemployment Compensation Administration Fund. On the $8,000 base that is roughly $4.00 per employee per year, so it will not move your cost model, but it is a real obligation: Va. Code 60.2 bars you from taking it out of employee wages, and unlike the UI tax itself it does not count toward state unemployment taxes paid for FUTA credit purposes. One caveat on the number. A Department of Planning and Budget fiscal impact statement from the 2026 session recites this fee as 0.5%, ten times higher than the enacted appropriation language. We publish the 0.05% in the enacted text, which the fee's own revenue projection supports, but confirm the operative rate with the VEC before you rely on it.
You hold the 2.50% base rate until the Virginia Employment Commission experience-rates you, after which your rate tracks your own layoff history between 0.10% and 6.20%. The federal FUTA layer sits on top at 6.0 percent on the first $7,000 of wages, less the full state credit for compliant Virginia payers, leaving an effective 0.6%. Across the US hiring guide, Virginia's low wage base makes it one of the cheaper UI states to model. Compare West Virginia's UI wage base for the regional picture.
What federal payroll and leave rules apply to Virginia employees?
You run the full federal stack: Social Security at 6.2% to $184,500, Medicare at 1.45%, and an effective 0.6% FUTA. Virginia's minimum wage is $12.77 an hour in 2026.
Virginia mandates no state disability insurance, and its new state paid family and medical leave programme does not take employer contributions until 1 April 2028, so neither costs you anything on a 2026 hire.
Virginia raised its minimum wage to $12.77 an hour from 1 January 2026, up from $12.41, and the rate is legislated to keep climbing toward $15 by 2028. A Virginia hire near the bottom of your pay band gets more expensive each January, so model the step-ups now. Virginia wage and overtime law covers overtime thresholds, meal breaks, and the full minimum wage schedule in detail.
Virginia runs no state disability insurance fund, and it is not one of the SDI states. Paid family leave is the part that changed. Virginia enacted a Paid Family and Medical Leave Insurance Program (HB1207 / SB2, now Va. Code Title 60.2 Chapter 8), signed on 22 April 2026 and in force from 1 July 2026, making it the first state in the South to create one. The timing is what matters for a 2026 model: employer contributions do not begin until 1 April 2028 and benefits do not start until 1 December 2028, so a Virginia hire carries no state paid leave cost in 2026. No contribution rate exists yet either. The Commissioner sets the first one no later than 1 October 2027 for calendar year 2028, and it will apply only to wages below the Social Security annual contribution and benefit base. When contributions do start, employers with more than 10 employees pay a share, while employers with 10 or fewer deduct 50% from employee wages and owe nothing further.
Today the job-protected family leave you plan around is federal FMLA, which applies to employers with 50 or more employees within 75 miles, though Chapter 8 carries its own employment-protection and anti-retaliation provisions as it comes into effect. Beyond that, paid time off is whatever you offer contractually. See the Virginia paid family and sick leave guide for the full picture on statutory leave entitlements. The federal stack stays standard: 6.2% Social Security to $184,500, 1.45% Medicare on all wages, and the 0.6% effective FUTA.
How Teamed runs Virginia payroll end to end
Teamed becomes your legal employer of record in Virginia for from $599 per employee per month flat. Zero FX mark-up. Statutory employer cost passes through at cost, itemised on every invoice.
You hire the person. Teamed registers with Virginia Tax and the VEC, withholds the graduated rate, handles bonus withholding, and runs UI on the $8,000 base. Everything runs on one platform.
Real HR and legal experts handle your Virginia hires, knowing the four-bracket withholding formula, the 5.75% supplemental rule on bonuses, and the $8,000 UI wage base. An actual person, not a chatbot or a pooled queue. You see every cost: state withholding, UI contributions, and federal employer taxes pass through at cost, itemised and auditable on every invoice. No setup fee. No exit fee.
Contractor onboarding, EOR payroll, and entity graduation all live on one platform: a Virginia contractor who converts to W-2 keeps their record, and that same employee can graduate to your own US entity without switching systems. Because the top 5.75% rate hits ordinary salaries, the withholding burden is real, so the cost case for your own entity can arrive sooner per headcount than in a no-income-tax state. Pair your Virginia termination obligations with the payroll picture when you model headcount risk. Use the Crossover Calculator to see the month the model flips, or the Employer Cost calculator to model the full loaded cost of a Virginia hire today. EOR is the right model, until it isn't.
The mistake we see on Virginia is reading a graduated tax as a gentle one. The top 5.75% rate starts at $17,000, so nearly every salaried hire pays it on most of their wages, and the bonus rule and unemployment base are all live obligations on top. A soft-looking bracket table is not a soft payroll. Budget for the boxes that carry the cost.
Four Virginia income-tax brackets. In practice your salaried hire pays the top 5.75% on most of their wages from month one.
Add an $8,000 UI base, a flat bonus rule, and the federal stack.
That is the part Teamed runs for you. One platform, from $599 flat, every cost itemised.
