Virginia’s tax system has a clear framework for both corporations and pass-through entities. Corporations with income connected to Virginia must file and pay a flat corporate income tax. At the same time, S corporations, partnerships, LLCs, and other pass-through entities must file informational returns and meet estimated tax requirements. Each category comes with its own rules for deadlines, penalties, and interest, making compliance a central requirement for doing business in Virginia.
This blog explains the tax obligations in Virginia, covering Corporate Income Tax and Pass-through Entity Tax. It outlines who is required to file, the rates and forms involved, due dates, and the penalty and interest structure for non-compliance.
Corporate Income Tax
C corporations in Virginia are subject to corporate income tax if they earn income derived from or connected with Virginia. This rule applies not only to corporations with a physical presence but also to those generating income from Virginia sources without being physically located in the state.
The corporate income tax rate in Virginia is a flat 6%.
Due Date: The corporate income tax return must be filed by the 15th day of the fourth month following the close of the reporting year. If the due date falls on a weekend or holiday, the deadline moves to the next business day.
Extension of Time: Corporations automatically receive a 7-month extension to file, without needing to submit a separate request. However, this extension is only for filing — not for paying taxes due. Payments must still be made by the original deadline.
Filing Requirements: Corporations must file Form 500, Virginia Corporation Income Tax Return, to report income, deductions, credits, and tax liability.
Corporations with an estimated tax liability of USD 1,000 or more in the current taxable year must make quarterly estimated tax payments using Form 500ES. These payments are due on the 15th day of the fourth, sixth, ninth, and twelfth months of the reporting year.
Penalties and Interest:
- Late Filing Penalty: If the return is not filed on time, a penalty applies. The minimum is USD 100, even if no tax is due for that reporting year.
- Late Payment Penalty: If taxes are not paid by the due date, a penalty of 6% per month is assessed, capped at 30% of the total tax due.
- Interest: On any unpaid balance, Virginia charges interest of 7% per quarter for most taxpayers, and 9% per quarter for large corporate taxpayers.
These requirements ensure that both filing and payment deadlines are met, with strict penalties for non-compliance.
Pass through Entity Tax
Pass-through entities (PTEs) in Virginia include:
- S corporations
- General partnerships
- Limited partnerships
- Limited liability partnerships (LLPs)
- Limited liability companies (LLCs)
- Electing large partnerships
- Business trusts
Every PTE doing business in Virginia or earning income from Virginia sources must electronically file a pass-through entity tax return each year.
Extension of Time: PTEs automatically receive a 6-month extension to file their return, without needing a separate request. Like corporations, this extension applies only to filing, not to payment.
Due Date: The PTE return is due on the 15th day of the fourth month after the close of the entity’s tax year.
Filing Requirements: PTEs must file Form 502, Shareholders’ Share of or Partners’ Share of Income and Virginia Modifications and Credits, to report taxes.
Estimated Tax Payments: Pass-through entities with a tax liability of USD 150 or more must make estimated payments. These payments are due on:
- May 1
- June 15
- September 15
- January 15 of the following year
Payments are made using Form 760ES.
Penalties and Interest:
- Late Payment Penalty: A penalty of 6% per month, capped at 30% of the tax due, is applied when taxes are not paid on time.
- Interest: Unpaid balances are charged interest at 7% per quarter, or 9% per quarter for large corporate taxpayers.
As pass-through entities are not taxed at the entity level, income is passed on to shareholders or partners, who report it on their individual tax returns. Still, PTEs must meet the state’s filing and estimated payment obligations to remain compliant.
Conclusion
Virginia’s tax structure ensures accountability from both corporations and pass-through entities.
- C corporations must pay a flat 6% corporate tax, file Form 500, and make quarterly estimated payments if their liability exceeds USD 1,000. Penalties and interest make timely compliance essential.
- Pass-through entities must file Form 502, report shareholder or partner income, and make estimated payments if liability exceeds USD 150. While income is not taxed at the entity level, Virginia enforces strict rules for reporting and payments.
Extensions provide extra time to file but not to pay, which means businesses must stay proactive about meeting payment deadlines. With its clear structure and enforcement measures, Virginia emphasizes timely compliance and accurate reporting for every business entity.
