State guide · Virginia · 2026 rules

S corporation in Virginia: what the election changes

Virginia adds no entity tax and no new fee. The main state change is unemployment tax on your salary.

Updated October 24, 202614 official sources

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You’ll need: last year’s Schedule C (line 31) and the W-2 from any job you also hold. Everything else starts at a typical value you can change.

State where the business is Each state treats the election differently. The check shows only the questions that matter there.

Net profit for the year, before paying yourself Your business's profit after expenses. Money you take out for yourself does not lower it.

Where do I find this?

Schedule C, line 31 (“Net profit or (loss)”) on last year’s return.

For this year: sales minus business expenses so far, scaled to a full year. Owner draws are not an expense.

Salary you would pay yourself as an S corporation What you would pay yourself through payroll. The IRS expects a reasonable salary for the work you do.

Where do I find this?

No form shows this yet: you choose it. It should be about what you would pay someone else to do your work.

The salary finder just below shows what employees in your job earn in your state or metro area. What the IRS looks at.

Salary finder: what people in your job earn (BLS)

Your job Pick the job closest to what you do most of the week.

Area Pick your metro area if it is listed. Pay varies by area.

Another job I also earn W-2 wages from a job outside this business

Typical values: change them if you know yours

Payroll service, per year typical value Published one-person prices: $492 to $684 a year (October 2026).

Where do I find this?

Your payroll provider’s price page or quote, for one employee: you. Published prices compared.

Extra tax-prep cost for the S-corp return typical value A survey average: the fee for Form 1120-S minus the fee for Schedule C (2020 fees).

Where do I find this?

Ask your preparer what a Form 1120-S (the S corporation’s own return) would cost, then subtract what you pay now for Schedule C.

Your top federal income tax rate Not sure? Keep 22%. It changes line 5 only.

Where do I find this?

Your taxable income is on Form 1040, line 15. Find the rate for that income and your filing status in the IRS rates and brackets table.

Filing status Changes the result only above $200,000 of earnings ($250,000 if married filing jointly, $125,000 if married filing separately).

Where do I find this?

The box checked under Filing Status at the top of your Form 1040.

Choose a state and enter your profit and salary to see the comparison.

The state

Virginia follows the federal S election and does not apply its corporate income tax to an S corporation. The S corporation files Form 502 each year. You pay Virginia individual income tax on the profit either way.

A Virginia LLC pays a $50 annual registration fee to the State Corporation Commission. An LLC that elects stays an LLC, so the fee does not change. A sole proprietor pays no fee today and must form an entity before electing, which starts the $50 fee.

Payroll taxes on your salary

Unemployment insurance: 2.5% for a new employer on the first $8,000 of wages. Virginia’s definition of employment covers any service performed for pay, and the calculator counts your salary.

Add-ons apply on top. A 0.05% administrative fee is offset by a 0.05% cut in the rate. An annual pool cost charge appears on each employer’s rate notice; the calculator leaves it out. A 0.2% fund-building charge applies only when the trust fund balance is 50% or less.

Virginia’s paid family and medical leave program starts payroll contributions on April 1, 2028. The rate will be set by October 1, 2027. Employers with 10 or fewer employees do not pay the employer share; workers pay their share.

The optional pass-through entity tax

An S corporation can elect each year to pay Virginia’s 5.75% pass-through entity tax on Form 502PTET. You get a refundable credit for your share. A disregarded single-member LLC cannot make this election; after the S election the business can. The calculator leaves it out.

Worked examples

A single-member LLC owner, single filer, 22% federal bracket, default payroll and return costs. The figure is total tax and added costs as an S corporation compared with staying as you are.

Profit / salary	Statewide
$80,000 / $45,000	$770 lower
$120,000 / $60,000	$3,172 lower
$200,000 / $90,000	$7,952 lower

Starting payroll in Virginia

Register for employer withholding with Virginia Tax, and for unemployment insurance with the Virginia Employment Commission.

New hire paperwork for Virginia

Other states

All state guides and the map

Sources

Federal figures: IRS Publication 15 (2026), Schedule SE and Form 2553 instructions. Every figure was read on an official page and checked a second time. Checked October 24, 2026. How we check facts.

An estimate from public rules, not tax advice.

Ready to elect? See the Form 2553 steps.

Electing S corp status