As an independent city (Virginia cities have no county affiliation), Alexandria provides a comprehensive range of municipal services including: education, health, welfare, and housing and human services programs; public safety and administration of justice; community development, recreation, libraries, consumer assistance, and cultural and historic activities; and transportation, environmental services, and planning.
In order to provide these services, the city may tax real estate, personal property, cigarettes, hotel and motel rooms, restaurant meals, business gross receipts, utilities, admissions, and sales. Personal income and certain public service franchises are taxed only by the state.
The growth and prosperity of businesses is an important goal in the city’s strategic plan. Maintaining competitive tax rates and comparable business operating costs, as compared with localities in the region, is vital to achieving this goal. Detailed information about the various taxes and current rates can be found on the city’s Finance Department website.
Businesses and organizations may be assessed taxes in the following categories. New tax rates are adopted annually by the city council in early May.
Tax or Fee TypeDescription
All businesses and organizations must obtain a business license to operate in the city, and must renew the license annually. Tax is assessed on gross receipts, and the rate varies by type of business (see list here). Each business must estimate the gross receipts it will receive between the date of beginning business and the end of the current license year (Dec. 31). The current year’s license tax is computed on that estimate.
If estimated gross receipts are $2 million or greater, the estimated license tax is adjusted at the end of the tax year to reflect the business’ actual gross receipts.
In the first year of operation: A business has no tax liability if its estimated gross receipts are less than $100,000. However, the business must still register with the Permit Center.
The minimum annual license tax is $50 for businesses with estimated gross receipts of at least $100,000 but less than $1,999,999.
Businesses with estimated gross receipts of $2,000,000 or more are assessed a percentage of their gross receipts.
A more detailed explanation of this tax, including information on tax rates, is available on the Business License Tax page. Examples of business tax calculations can be found at How Business License Tax Is Calculated.
Tangible personal property: $4.75 per $100 of assessed value
Machinery and tools: $4.50 per $100 of assessed value
$1.038 per $100 in assessed value; $1.198 for properties in the
Potomac Yard Tier I Special Services District
$4.75 per $100 in assessed value, see decal fee schedule on Personal Property Tax page.
6% (5% state + 1% local)
6.5% of room rental charge + $1 per room per night
1%; 1.5% for rental of heavy equipment
10% (not to exceed $0.50 per person)
$0.80 per $100 of net capital