Taxes

Tax Summary

Corporate Income Tax (Federal)

15% for 1st $50,000; 25% for next $25,000; 34% for all over $75,000

Corporate Income Tax (State)

Virginia corporate Income tax is 6%.

Payroll Taxes.

Income Tax - employee's share. Employers withhold taxes from employee's wages. Amounts run about 10% to 15% of gross pay. The amount varies based on the number of exemptions claimed by the worker under various Federal and State laws.

Social Security Taxes.

For 1997, both employer's and employee's share of Social Security (FICA) is 6.2% of earnings up to $61,200. Medicare tax is 1.45% on all amounts. (The upper limit for this tax was eliminated beginning tax year 1994).

Contributions to Unions.

Virginia is a Right to Work State and union check off is not permitted.

Unemployment Taxes (Federal and State)

There are two; Federal (FUTA) and State (SUTA). FUTA is 6.2% on the first $7,000 of worker's earnings. Generally, the employer can take a credit against FUTA for contributions to State unemployment funds up to 5.4% of the first $7,000. For SUTA, companies newly established in Virginia pay 2.57% of the first $8,000. The Virginia Employment Commission will then determine a revised rate which is based on the company's unemployment claims experience over four years of operation. In 1993, effective rates vaired from 0.17% to 6.27%. If a Virginia company with all its employees is acquired by another company, the initial SUTA rate will be that paid by the acquired company at the time of acquisition.

Workers' Compensation (State)

Workers' Compensation will be a function of choice of purchase from providers of property and casualty insurance, group insurance from groups approved by the State Corporation Commission, self insurance if acceptable to Virginia Workers' Compensation Commission, or through the National Council on Compensation Insurance (NCCI).

Workers' Compensation in Virginia ranks among the lowest cost in the nation. For many years, Virginia rates have run only half or lower than national averages. For 1992, 1993, 1994, and 1995, Virginia's net costs were the lowest in the nation according to "State Rankings of Workers' Compensation Insurance Rates" by Actuarial and Technical Solutions, Inc. According to the Virginia Department of Economic Development, the 1995 costs were $2.40 per $100 of payroll versus $5.39 per $100 for the USA.

Personal Income Tax Rates (State)

					of excess over:
	< $ 3,000			2%				
	> $ 3,000 to $ 5,000	$60 + 	3%  	$3,000
	> $ 5,000 to $17,000	$120 + 	5%	$5,000
	> $17,000		$720 + 	5.75%	$17,000

Sales and Use (State and Local)

State and local exemptions are the same and depend upon the type of operation.

Note: Real estate, personal property, business license, and utility taxes are paid at the local level and may vary according to type of operation.

Real estate taxes are (1997) $.59 per $100 of assessed value for Frederick County and $.59 per $100 for the City of Winchester. Real estate is assessed at 100% market value.