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Cost of Doing Business

Business investment decisions are about the bottom line.  Virginia works hard to be the best place in which to do business.  The value found here for business investors is evidenced by Virginia's consistently high-rankings as the top place to do business in the United States. 

Within Virginia, the Greater Richmond area offers distinct "bottom-line" advantages over other competitor markets, as shown in the U.S. Start-Up Model for International Firms, which compares startup costs in Greater Richmond versus eight other cities.  A summary version is also available. 

Within the Greater Richmond area, Hanover County has distinct "bottom-line" advantages that will help any business investor achieve their goals; tax-related advantages are described in the tables below.

Local Taxes

  • Hanover County has the lowest real estate property tax rate in the Greater Richmond region.
  • No Business and Professional Occupation License Tax (BPOL) is required, except for contractors.
  • Machinery and tools tax rates are regionally competitive.
  • Business personal property taxes are calculated on a sliding scale and are depreciated each year the property is in use.
  • Merchant’s capital or inventory tax is based only on inventory in place on January 1 of each year.
  • Consumer utility tax for electric, gas and telephone are regionally competitive.
  • Businesses located in the Town of Ashland pay Town taxes in addition to County taxes.

Business taxes in Hanover County and the Town of Ashland are described in the tables below.

Additional information about County taxes is available from Hanover County's Commissioner of Revenue. All businesses must register with the Commissioner of Revenue's office.

Tax Description Hanover County Assessment Ratio per $100 of Assessed Value
Real Estate $0.81 100% of market value
Machinery and Tools $3.57 10% of original cost
Business Personal Property1 $3.57 60% of original cost (Year 1 in service)
50% of original cost (Year 2 in service
40% of original cost (Year 3 in service
30% of original cost (Year 4 in service
20% of original cost (Year 5 in service)
10% of original cost (Year 6+ in service)
BPOL None2  
Merchant’s Capital $1.90 10% of original cost based on inventory in place on January 1
Industrial/Commercial Utility Yes 0.5% of gross receipts
Consumer Utility $3.00 Per line per month
1Business personal property includes, but is not limited to, automobiles and trucks, office equipment, furniture and fixtures, and machinery and equipment of non-manufacturing businesses. Items specifically exempted include: computer application software, corporate aircraft of manufacturers, inventory (except inventory of merchants), and merchandise in a foreign trade zone. The machinery and tools of manufacturers and certain of other businesses are considered a separate class of property and are subject to the machinery and tools tax. These items may be taxed at a lower rate than other personal property.

2Only contractors are subject to BPOL of $0.10 per $100 of gross receipts of $100,000+.

Local Taxes - Town of Ashland

The Town of Ashland is a 7.2 square mile incorporated town in central Hanover County. Businesses located in the Town may be subject to a small, additional levy on some business and real estate taxes.  Go to the Town’s website to see their business tax rates.

Tax Description Town of Ashland Assessment Ratio per $100 of Assessed Value
Real Estate $0.09 100% of market value
Machinery and Tools $0.77 10% of original cost
Business Personal Property1 $0.77 60% of original cost (Year 1 in service)
50% of original cost (Year 2 in service
40% of original cost (Year 3 in service
30% of original cost (Year 4 in service
20% of original cost (Year 5 in service)
10% of original cost (Year 6+ in service)
BPOL Yes3  
Merchant’s Capital None 10% of original cost based on inventory in place on January 1
Industrial/Commercial Utility None 0.5% of gross receipts
Consumer Utility $1.00 (electric, gas, & telephone) Per line per month Per line per month
There is a $30 license fee for non-manufacturing businesses that have gross receipts of less than $100,000.  The fee is $.07/$100 for companies with receipts between $100,001 and $25 million. Businesses with receipts above $25 million but less than $50 million are taxed at $.05/$100.  Businesses with more than $50 million in receipts pay $0.02/$100.million.

State Taxes

Corporate Income Tax: 6 percent

The corporate income tax rate is applied to federal taxable income. If a corporation is engaged in multi-state activities and its income is subject to tax in Virginia and other states, it pays tax only on the portion of its income from Virginia sources. The apportioned income is based on a three-factor formula of payroll, property, and sales.

Sales and Use Tax: 5 percent

Sales and use tax is charged on consumer goods bought in the State of Virginia. Of the 5 percent sales tax, 4 percent goes to the Commonwealth of Virginia and 1 percent to the local jurisdiction in which the tax was charged.