Two things decide whether a job in Virginia makes you money: getting the license your work needs, and setting aside the right tax. Virginia licenses its contractors and taxes their profit, so both are worth getting right before you take work on.
Each section below points to a tool that runs your exact numbers for Virginia.
Tax in Virginia
Virginia has a graduated state income tax that runs up to 5.75% at the top, on top of your federal taxes. Graduated means the rate climbs as your profit does, so a good year costs proportionally more. You owe federal income tax and self-employment tax as well, and you make estimated payments to both Virginia and the IRS through the year.
On sales tax, Virginia follows the usual rule for the trades: your labor is not taxed, and you pay sales tax on your materials when you buy them rather than charging it to the customer.
Work out what to hold back on the Tax Set-Aside Calculator, which runs the federal and self-employment numbers for Virginia.
Getting paid: liens and retainage
A mechanic's lien is the tool that actually gets a Virginia contractor paid, and in Virginia you generally have to record it within 90 days of your last day of work (with a 150-day lookback). Miss it and you lose the lien, so the dates matter.
Enforcing it has its own clock. The later of 6 months from recording or 60 days from completion. Work out your dates on the Lien Deadline tool, and if they are close, get an attorney to confirm them against the statute (Va. Code §§43-4, 43-17).
On money held back as retainage, here is where Virginia lands:
- Private work: No statutory cap on private work in Virginia. Whatever your contract says governs, so read the withholding clause.
- Public work: 5% of the earned sum, you must be paid at least 95% of it when payment is due.
- Release: Public: no number of days is set at all. It falls due on final payment under the contract.
Check the Retainage Calculator before you sign a contract that holds back more.
Free Virginia retainage letters
Three letters written for Virginia's rules, with the state's own release clock and its statutory citation already in them. Fill one in on screen and download it as a PDF or a Word file.
- Retainage Release Request (Virginia), for when the job is done and the money has not come back
- Retainage Overdue: Demand for Payment (Virginia), for when the release date has passed and nothing has arrived
- Retainage Held Above the Cap: Challenge Letter (Virginia), for when more is being held than the state appears to permit
Do you need a license in Virginia?
Virginia requires a state contractor license to take building work on. The threshold that triggers it: Above $1,000. Class C under $30,000, Class B $30,000 to under $150,000, Class A $150,000 or more, with a SECOND ladder on 12-month totals. Working unlicensed when your job needs a license is the expensive mistake here. A separate, higher ladder applies to water well drilling and landscape irrigation at 54.1-1103(C), where a license is required REGARDLESS OF CONTRACT AMOUNT. 54.1-1101(A)(15) exempts work valued at 25,000 or less per project performed on behalf of a properly licensed contractor. The license comes from Department of Professional and Occupational Regulation (DPOR). Virginia accepts the NASCLA commercial exam, useful if you work across state lines.
Trade licenses for electrical, plumbing and HVAC are usually separate and often required even where a GC license is not. See what applies to your trade on the Contractor License Checker.
Building codes and permits
Virginia adopts its building codes statewide, so the rules travel with you across the state. Editions still move, so confirm yours with the building department before you price a job.
- Homes: 2021 (published as the Virginia Residential Code within the 2021 USBC; mandatory since 18 January 2025)
- Electrical: 2020, deliberately one edition behind the rest of the 2021 package
- Energy: 2021 with two Virginia amendments that weaken the residential requirements, plus ASHRAE 90.1-2019 for commercial
- Plumbing: 2021 IPC (the residential code's own plumbing chapters apply first to a house)
Virginia does not run one edition across the whole job, and the energy code is where it splits: 2021 with two Virginia amendments that weaken the residential requirements, plus ASHRAE 90.1-2019 for commercial. That matters more than the number itself. If you work on houses, the residential edition is your book, and the single figure quoted in most adoption charts is the commercial one.
Virginia runs one uniform statewide code that supersedes any county or municipal building regulation, and localities have not been given power to amend it: a building official may grant a project-specific modification where equivalent safety is shown, but that is a variance, not a local edition. So there is nowhere in Virginia that has adopted nothing. The package is called the 2021 USBC but not everything inside it is 2021: the electrical component is the 2020 NEC and the commercial energy side layers ASHRAE 90.1-2019 on top of the 2021 IECC. Build to the edition the department cites for your discipline rather than assuming the package year.
Source: 13VAC5-63 (Virginia Uniform Statewide Building Code), Board of Housing and Community Development, under Code of Virginia title 36 chapter 6, in particular §§36-97, 36-98 and 36-99; effective 18 January 2024 per Virginia Register volume 40 issue 9. Read against that source on 2026-08-25.
Check a specific job on the permit tool.
Pay and workers' comp
The minimum wage in Virginia is $12.77 an hour. CPI-indexed. That is the floor for anyone you put on the books, and it is worth confirming against the state labor department each year because several states step their rate mid-year. Check a rate on the minimum-wage tool.
Workers' comp rates in Virginia are not published as a single figure; they turn on your trade's class code and your payroll. Get a realistic range on the Workers' Comp Estimator, then get a real quote.
If a client will not pay
If a client will not pay, you can sue for up to $5,000 in Virginia's General District Court, Small Claims Division and lawyers are not allowed, which keeps it a level playing field. That covers most unpaid-invoice disputes for a small outfit; a bigger claim goes to regular civil court where you will probably want an attorney. Walk through whether filing is worth it on the Small Claims checker.
The clock runs the other way too: a client generally has 5 years to sue you over the work under a written contract in Virginia, with an absolute cutoff 5 years after the job is substantially complete. Work out your exposure on the Warranty & Claim Deadline tool.
Common questions
How much state income tax will I pay in Virginia?
Virginia has a graduated rate up to 5.75% state income tax on your profit, on top of federal income tax and self-employment tax. Use the Tax Set-Aside Calculator to see what to hold back.
Do I need a contractor's license in Virginia?
Yes. Virginia requires a state contractor license. The threshold: Above $1,000. Class C under $30,000, Class B $30,000 to under $150,000, Class A $150,000 or more, with a SECOND ladder on 12-month totals. It is issued by Department of Professional and Occupational Regulation (DPOR).
What is the small claims limit in Virginia?
You can sue for up to $5,000 in Virginia's General District Court, Small Claims Division. The filing fee is typically $30 to $75. Larger claims go to regular civil court.
How long do I have to file a mechanic's lien in Virginia?
Generally 90 days from your last day of work (with a 150-day lookback). Miss it and you lose the lien. Work your own dates out on the Lien Deadline tool.
How much retainage can be held back in Virginia?
Public: 5% of the earned sum, you must be paid at least 95% of it when payment is due. Run your own figure on the Retainage Calculator.
Are there free Virginia contract and payment forms?
Yes. This page links 3 retainage letters written to Virginia's own release clock and carrying its statutory citation. They are free, there is no sign-up, and you fill one in on screen and download it as a PDF or a Word file.
What is the minimum wage in Virginia?
$12.77 an hour in Virginia, above the federal $7.25. Several states step their rate mid-year, so confirm it before you set a payroll.
The honest bit
These are the 2026 rules for Virginia as they stood when this guide was written, and they change: legislatures move thresholds, deadlines and rates every year. Treat this as general guidance to point you in the right direction, not legal, tax or financial advice. Verify anything you rely on at the source (the IRS, the Virginia tax and licensing agencies, and your local building department) or with a professional. Where Virginia does something unusual, the detail is called out above rather than glossed over.
Related: Tax Set-Aside Calculator · Mechanic's Lien Deadline · Contractor License Checker · Small Claims checker · Working in Your State
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Templates you might need
Sources
- Virginia contractor licensing authority · Virginia contractor licensing authority. Who must hold a contractor or trade license in Virginia, and the licensing instrument (https://www.nascla.org/commercial-exam-participating-state-agencies/virginia-board-contractors-department-professional-and-occupational-licensing)
- Virginia Law · Mechanics lien notice, filing and enforcement deadlines in Virginia: Va. Code §§43-4, 43-17. Verified against this authority on 2026-08-09.
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