State playbook - Virginia

Matchbook, tuned for Virginia payroll, programs, and Atlantic storms.

Virginia layers a 5.75% top marginal rate on top of federal plus FICA, so Section 125 and 132(f) elections compound harder than in no-income-tax states. The SUI wage base is $8,000, Invest529 offers a resident deduction, and Medicaid expanded in 2019 - Matchbook models each of these and the Atlantic/winter disaster exposure across WMATA, GRTC, and HRT commuter zones.

What Matchbook ships for Virginia Tax profile
Tax mechanics

Payroll tax in Virginia

State income tax

Applies

Virginia is a progressive state with brackets at 2%, 3%, 5%, and a 5.75% top rate that kicks in at just $17,000 of taxable income - so most full-time Virginia employees hit the top marginal rate. Employee pre-tax savings stack is federal marginal plus 5.75% Virginia plus 7.65% FICA. A $3,300 healthcare FSA election saves about $1,247 for a 22% federal bracket Virginia employee versus about $1,050 for the same Florida employee. Matchbook calibrates Virginia savings projections at the 5.75% state layer by default.

Virginia Unemployment Insurance Tax

Wage base $8,000 (2025/2026)

Rate range: 0.10%-6.20% (including fund-builder and pool cost charge); new employer rate 2.50% (2.73% with surcharges); computed rate schedule varies year to year based on VEC trust fund balance

The $8,000 Virginia UI wage base is low enough that Section 125 salary reductions produce meaningful employer UI savings only for part-time or mid-year hires. Matchbook suppresses the UI savings line for salaried Virginia employees above the $8K base and highlights the 7.65% FICA match as the primary employer payroll-tax win on Section 125 and Section 132(f) elections.

Employer FICA

7.65% / 1.45% split

Employer FICA is 7.65% on wages up to the Social Security wage base ($176,100 in 2025; projected about $183,600 in 2026) and 1.45% above it. Matchbook models this per employee rather than quoting a flat rate.

Employer credits and levers

State and federal credits worth stacking

Credits that most broker ROI decks omit. Matchbook surfaces these in the employer report.

Virginia Major Business Facility Job Tax Credit

Virginia income tax credit of $1,000 per qualified new full-time job above a threshold (50 jobs in most areas; 25 in enterprise zones or economically distressed localities). Credit is taken in equal installments over two years. Useful to flag alongside benefit-design levers when a Virginia employer is expanding headcount.

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Virginia Research and Development Expenses Tax Credit

Refundable R&D credit equal to 15% of the first $300K in Virginia qualified R&D expenses (20% if conducted with a Virginia public or nonprofit college), capped at $7.7M statewide per fiscal year. A separate Major R&D credit (nonrefundable, 10% over a base) applies to expenditures exceeding $5M. Relevant for benefits ROI when an R&D-intensive Virginia employer evaluates engineer-heavy benefit spend.

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Virginia Worker Retraining / Worker Training Tax Credit

Virginia corporate or individual income tax credit for employer-sponsored worker training: 35% of direct costs for non-credit training at a Virginia community college or private career school, or 35% of costs for manufacturing workers (capped at $500 per trainee, or $1,000 if STEM or high-demand). Statewide cap $1M per fiscal year. Matchbook highlights this when an employer bundles upskilling stipends with benefits.

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Federal IRC Section 45F (stacks with Virginia programs)

Federal employer-provided childcare credit. 25% credit with $150K cap in 2025; rises to 40% with $500K cap in 2026, and 50% with $600K cap for small employers. Virginia does not currently offer a state childcare employer credit, so Matchbook's Virginia employer ROI report models Section 45F solo for on-site or sponsored care.

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Virginia Economic Development Partnership (VEDA) incentives

Discretionary grant and incentive programs (Commonwealth's Development Opportunity Fund, VJIP training grants, Virginia Talent Accelerator) that sit alongside statutory tax credits. Matchbook flags VEDA-eligible expansions when modeling headcount growth scenarios against benefits budget.

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Household programs

State programs that change what your employees should elect

Matchbook coordinates these against DCFSA, FSA, and HSA elections at the household level.

Childcare subsidy

Virginia Child Care Subsidy Program (CCSP)

Virginia Department of Education (formerly VDSS) administered subsidy for income-qualifying working families up to 85% of State Median Income. Parent copayments vary by income and household size; the program covers center-based, family day home, and approved relative care.

Matchbook: CCSP reduces out-of-pocket dependent-care cost and therefore reduces the right DCFSA election. Matchbook asks Virginia employees whether they qualify before recommending DCFSA contribution levels.

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Preschool

Virginia Preschool Initiative (VPI)

State-funded program providing quality preschool for at-risk 3- and 4-year-olds through local school divisions and community partners. Full-day and half-day options available depending on locality; expanded via the Mixed Delivery program to include private and community-based providers.

Matchbook: VPI slots vary by locality and are often partial-day. The correct DCFSA election for a VPI family is the full-day center cost minus VPI-funded hours, not zero. Matchbook models this split explicitly.

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Health programs

Coverage coordination checkpoints

FAMIS (Virginia CHIP) and FAMIS Plus

Subsidized children's health coverage for families up to 205% FPL (FAMIS) with no premiums and minimal copays; FAMIS Plus covers children in families below Medicaid thresholds. FAMIS MOMS covers pregnant women up to 205% FPL.

Matchbook: Employees declining dependent coverage on the employer plan should be screened against FAMIS thresholds before Matchbook defaults to the family tier.

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Virginia Medicaid - 2019 expansion and redetermination

Virginia expanded Medicaid to 138% FPL effective January 1, 2019, adding coverage for adults up to that threshold. Post-PHE redeterminations disenrolled several hundred thousand Virginians, a large share procedurally. Open enrollment is the right touchpoint to recover procedurally-disenrolled dependents onto employer coverage or FAMIS.

Matchbook: Matchbook's Virginia screener flags households that may have lost Medicaid for reasons unrelated to eligibility and offers the enrollment path.

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ACA Marketplace - Virginia's Insurance Marketplace (transitioning to SBM)

Virginia ran on the FFM through 2023 and has transitioned to a State-Based Marketplace (Virginia's Insurance Marketplace). 2026 employer-affordability threshold is 9.96% of household income. Enhanced premium tax credits expired at the end of 2025, so Virginia 2026 premiums see meaningful increases. Family-glitch fix still applies.

Matchbook: If employer family coverage exceeds 9.96% of household income, Matchbook surfaces the Marketplace dependent subsidy path - Virginia residents now enroll through marketplace.virginia.gov rather than HealthCare.gov.

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No state PFML mandate - WMATA and voluntary plans

Virginia has no state paid family or medical leave mandate. Short-term disability is voluntary at most Virginia employers; WMATA and some large public employers offer their own disability plans. Virginia employers should treat STD and voluntary PFML as active benefit-design choices, not statutory defaults.

Matchbook: Matchbook's Virginia employer dashboard flags the absence of state PFML and recommends STD/voluntary PFML election gaps at open enrollment rather than assuming statutory coverage.

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Retirement and wealth

State-level retirement and wealth context

ABLEnow (Virginia-sponsored, national hub)

ABLEnow is administered by Virginia529 and serves as one of the largest national ABLE programs, open to eligible beneficiaries in any state. 2025 contribution limit $19,000; employed beneficiaries may add up to $15,060 more. $550K Virginia account balance cap; $100K SSI asset disregard.

Matchbook: FSA or HSA dollars reimburse medical expenses; ABLEnow covers broader qualified disability expenses. When SSI asset limits are in play, Matchbook routes disability-related spend to ABLEnow first. Because ABLEnow accepts beneficiaries from any state, Matchbook ships it as the default ABLE recommendation nationally.

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Virginia529 / Invest529

Virginia taxpayers may deduct up to $4,000 per Invest529 account per year from Virginia adjusted gross income; contributors age 70+ may deduct the full amount without the $4,000 cap. Excess contributions carry forward. One of the more generous per-account 529 deductions in the country.

Matchbook: Matchbook tilts Virginia employees toward Invest529 over out-of-state 529 plans because the per-account $4,000 deduction stacks across multiple beneficiaries and carries forward - a material tax arbitrage at the 5.75% Virginia top rate.

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Section 132(f) commuter

Pre-tax commuter reality in Virginia

2025 IRC Section 132(f) cap is $325 per month for transit and $325 per month for qualified parking.

Parking and state credits

Parking: Rosslyn, Tysons, and Arlington CBD parking frequently approach or exceed the $325 monthly cap; Richmond and Hampton Roads parking generally sit below the cap.

State credit: None - Virginia has no state-level commuter tax credit, though transit benefits remain federally excludable under Section 132(f).

Disaster readiness

Virginia disaster-relief playbook

IRC Section 139 qualified disaster relief payments are not W-2 wages: no FICA, no FUTA, no federal income tax withholding, and the employer gets a full deduction. Triggered by a federal disaster declaration. Virginia qualifies regularly for hurricanes and tropical systems, nor'easters, severe winter storms, and inland flooding (recent examples include Helene 2024 southwest Virginia flooding and coastal Atlantic storm declarations).

  • Pre-drafted Section 139 policy template so Virginia employers can disburse tax-free relief within 48 hours of a federal declaration.
  • Post-storm Section 125 election-change guidance: a storm alone is not a listed change-in-status event under Treas. Reg. 1.125-4 - it qualifies only when it triggers a change in residence, employment, or cost-of-coverage.
  • FEMA Individual Assistance interaction: IRS Section 139 payments generally stack with FEMA IA, but Matchbook flags duplication risks in the disbursement log.
  • Virginia-specific employer disaster leave review - Virginia has no statutory paid disaster leave, so employer policy is the governing rule. Northern Virginia federal-contractor employees may have OPM-driven schedule guidance layered on top.
Matchbook for Virginia

What we ship specifically for Virginia employers

  • 5.75% Virginia marginal calibration in the employee savings engine - default to the top rate for most full-time Virginia employees and surface the per-election Virginia tax savings line.
  • Invest529 deduction optimizer - model the per-account $4,000 Virginia AGI deduction and carry-forward across multiple beneficiaries; tilt Virginia residents away from out-of-state 529s.
  • CCSP and VPI wrap-around logic in the DCFSA recommender, ingesting Virginia Department of Education eligibility rules and locality-by-locality VPI slot coverage.
  • Suppress the UI savings line for salaried workers in the Virginia employer FICA and SUI report - the $8,000 wage base makes it misleading beyond the first weeks of the year.
  • IRC Section 139 disaster playbook template tuned for Virginia's hurricane, nor'easter, winter storm, and inland flooding exposures, with a pre-drafted employer policy and post-storm Section 125 election-change guidance.
  • FAMIS and Medicaid redetermination screener at open enrollment to recover procedurally-disenrolled dependents onto employer coverage or FAMIS.
  • ABLEnow as national default ABLE recommendation - Matchbook ships ABLEnow for disabled beneficiaries in every state, not just Virginia, because ABLEnow accepts out-of-state residents.
  • Commuter benefits tuned for WMATA/VRE (NoVA), GRTC (Richmond), and HRT (Hampton Roads), with a Marketplace handoff to marketplace.virginia.gov now that Virginia operates an SBM.
Sources

Primary sources for this playbook

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