Virginia Sales Tax Guide for SaaS and E-Commerce Businesses 2025
Virginia imposes a base 4.3% sales tax, plus a 1% local option tax, and additional regional taxes in certain areas. Combined rates generally range from 5.3% to 7%. The state taxes tangible personal property and limited services, but SaaS and electronically delivered software are generally exempt under Virginia Department of Taxation guidance.
Last updated: October 2025
Quick Reference: Virginia Sales & Use Tax 2025
| Topic | Details |
|---|---|
| State base rate | 4.3% (Virginia Retail Sales & Use Tax) |
| Local rates | 0%–2.7%, depending on locality |
| Economic nexus threshold | $100,000 in sales or 200 transactions into Virginia (Remote Sellers & Marketplace Facilitators) |
| Is SaaS taxable? | No. Electronically delivered software and cloud-based SaaS are generally exempt |
| Filing due date | 20th of the month following the reporting period (When to File) |
| Registration portal | Virginia Tax Online Services |
| Tax agency | Virginia Department of Taxation |
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SaaS & Digital Products in Virginia
Virginia exempts most electronically delivered software and SaaS because these transactions do not involve a transfer of tangible personal property. The state clarified this position in multiple rulings, including Tax Commissioner Ruling 16-135.
Key details:
- SaaS (software accessed online) is not taxable when no tangible copy is provided
- Electronically delivered software (downloaded or accessed digitally) is exempt
- Software sold on a physical medium such as a CD or USB is taxable
- Custom software developed for one client is exempt
- Certain digital products like streaming subscriptions remain nontaxable unless tied to tangible goods
Sources:
- Virginia Retail Sales & Use Tax
- Tax Commissioner Ruling 16-135
- Virginia Sales Tax Exemptions List (2024)
E-Commerce & Tangible Goods in Virginia
| Category | Taxable? | Notes |
|---|---|---|
| Tangible goods | Yes | Taxable when sold, shipped, or delivered in Virginia |
| SaaS / cloud software | No | Exempt when accessed electronically without physical media |
| Prewritten software on disk | Yes | Taxable as tangible property |
| Digital downloads | No | Exempt unless bundled with taxable tangible items |
| Services | Mostly no | Only certain enumerated services are subject to tax |
Virginia law defines taxable transactions as those involving tangible personal property. Purely electronic or online access remains exempt unless accompanied by tangible components.
Reference: Virginia Retail Sales & Use Tax
Economic Nexus & Marketplace Rules
Remote sellers and marketplace facilitators are required to register and collect Virginia sales tax if, in the current or previous calendar year, they exceed either:
- $100,000 in gross revenue from retail sales into Virginia, or
- 200 separate transactions for delivery into Virginia
These rules were implemented following the Wayfair decision and apply only to taxable goods and services, not exempt SaaS or digital products.
Official guidance:
Filing & Registration
- Register with the Virginia Department of Taxation for a retail sales tax permit
- File and pay electronically through Virginia’s online tax portal: Virginia Tax Online Services
- Returns and payments are due by the 20th of the month following the reporting period
- Filing frequency (monthly, quarterly, or annually) is based on taxable sales volume
- See filing guidance: When to File
For full details on filing, payment methods, and due dates, visit the Virginia Retail Sales & Use Tax page.
Penalties & Compliance Notes
- Late filing or payment can result in penalties and daily interest
- Bundled sales (digital + tangible) should be separated clearly on invoices
- Maintain documentation on delivery methods and whether software is transferred electronically or physically
- Review Tax Commissioner rulings for case-specific interpretations
Reference: Tax Commissioner Ruling 16-135
FAQs: Virginia Sales Tax for SaaS & E-Commerce
Is SaaS taxable in Virginia?
No. SaaS is not taxable when accessed electronically without transferring tangible property.
Are digital goods taxable?
No, unless tied to a tangible component or physical delivery.
What is Virginia’s economic nexus rule?
Remote sellers and marketplaces must collect if they exceed $100,000 in sales or 200 transactions into Virginia.
Do marketplace facilitators need to collect?
Yes, for taxable tangible goods once nexus is reached.
When are sales tax returns due?
Returns and payments are due by the 20th of the month following the close of the reporting period.
Official Virginia Resources
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