New report examines local tax burdens impacting Virginia’s hospitality and tourism industries
RICHMOND – VRLTA announced the completion and release of a comprehensive, statewide analysis of local meals taxes, transient occupancy taxes (TOT), effective sales taxes, and bed taxes across the Commonwealth. The study, which examines tax data from all 133 defined localities in Virginia, is now available for public download and is intended to provide policymakers, business operators, and consumers with greater transparency into the local tax landscape impacting the hospitality and tourism industries.
The release of the study comes at a critical time for Virginia’s restaurants, hotels, and travel-related businesses. In 2025, operators continued to face an increasingly difficult operating environment driven by rising labor costs, higher prices for food and materials, increased utility and rent expenses, growing credit card fees, and escalating taxes. These pressures have coincided with shifting consumer behavior, including reduced dining out, lower alcohol consumption, and increased price sensitivity. As a result, many long-standing establishments have struggled to remain viable, with some choosing to close rather than operate at sustained losses.
“Virginia’s hospitality and tourism businesses are operating in an increasingly tenuous environment,” says Eric Terry, President of VRLTA. “Rising labor costs, inflationary pressures, and shifting consumer behavior are already stretching operators thin, and layered, prohibitive local taxes only compound those challenges—making it harder for restaurants, hotels, and travel-related businesses to achieve sustainable success across the Commonwealth.”
Against this backdrop, VRLTA undertook a months-long effort to compile and analyze local tax data from across the Commonwealth. The study evaluates regional patterns, governance-related trends, recent tax activity, and the relationship between tax rates and population size. The findings reveal a highly fragmented and uneven local tax environment, with significant variation between regions and forms of local government. Analysis further shows that nearly one-third of Virginia localities exceed the statewide sales tax rate of 5.3 percent due to local add-ons, with the highest concentrations found in Coastal Virginia, Northern Virginia, and Southern Virginia.
“Our goal with this study is to bring clarity and transparency to a complex local tax landscape,” says Tommy Herbert, Director of Government Affairs at VRLTA. “We hope the data helps illustrate how these policies are impacting businesses and consumers alike, and we encourage policymakers, community leaders, and the public to engage with the findings as they consider future tax and economic development decisions.”
The full report is available for download through the link below.