What percent should the employer withhold for Virginia withholding for an employee who is to receive a separate supplemental payment for vacation, using a flat percentage rate?

• A. 5.75%
• B. 6.00%
• C. 5.50%
• D. 6.25%

Answer: (A)

When Virginia uses the flat percentage method for a separate supplemental payment (like vacation pay), the amount withheld for state income tax is five point seven five percent. This fixed rate is set by the Virginia Department of Taxation for supplemental wages paid separately from regular wages, and it doesn’t depend on the employee’s withholding allowances. If the supplemental payment were combined with regular wages and withheld using the regular wage method, the calculation would follow different rules based on regular wages and allowances. The other listed percentages aren’t the rate Virginia uses for this flat-rate treatment.