Lower M&T Tax Rate Benefits Henrico

Lower M&T Tax Rate Benefits Henrico

There’s no better place in Virginia to locate your manufacturing facility than Henrico County. One good reason is that Henrico has the lowest effective Machinery and Tools (M&T) tax rate in Central Virginia and the lowest effective rate of any county in Virginia with a population of at least 100,000. When you combine this fact with the county’s pro-business environment and low operational costs, Henrico is an unbeatable option.

Lowest M&T Tax in Central Virginia

The Henrico County Board of Supervisors lowered Henrico County’s Machinery and Tools (M&T) tax rate this year by 70 percent, from the previous nominal rate of $1.00/$100 of assessed value to $0.30/$100. The effective tax rate is $0.24/$100 in year one, and the rate decreases based on the current depreciation schedule to $.03/$100 in year 15.

“We’re serious about attracting manufacturing to Henrico County, and I think this is proof of that,” says Gary McLaren, Henrico County Economic Development Authority Executive Director. “Henrico’s new M&T rate is a fraction of the tax charged by Virginia’s larger counties.”

Schedule 90 M&T Depreciation Schedule
Year Percentage of Original Cost
Year 1 80%
Year 2 76%
Year 3 68%
Year 4 60%
Year 5 53%
Years 6-10 26%
Years 11-12 20%
Years 13-14 15%
Year 15+ 10%

The lower tax rate, officially approved by the Board of Supervisors in April of this year, was made effective as of January 1, 2015, so that companies already located in the county could enjoy the benefit of the rate reduction immediately.

“Henrico County clearly understands that the jobs and tax base business brings are essential to our vitality and quality of life” says Henrico County Board of Supervisors Chairman Frank Thornton. “The Board of Supervisors’ recent decision to reduce our Machinery and Tools tax resulted from our continuing efforts to be competitive for manufacturing.”

The change to the tax rate also makes good business sense in light of a trend in the manufacturing industry of moving jobs back to the U.S. from other countries. According to Thornton, “As we heard more and more about the manufacturing sector ‘reshoring,’ we determined that we should ensure our tax rates were attractive to this sector that makes heavy capital investments and pays its employees well.”

Lower M&T Tax rate helps Henrico manufacturing business stay competitiveLower Rate Helps Firms Stay Competitive

“Henrico recognizes that manufacturers need to be able to adapt and make changes to remain competitive in their industries, says John Vithoulkas, County Manager, Henrico County. “That means acquiring new equipment — an expensive proposition when the Machinery and Tools tax is too high. That actually can be a disincentive for manufacturers to update and expand their operations here or for prospects to consider relocating here.”

Vithoulkas adds, “The feedback from every existing business we’ve talked to about our lower tax has been positive. It’s going to enable them to reinvest in their operations without being penalized for it with a big tax bill.”

Domnion Packaging

Dominion Packaging, a privately owned manufacturing firm that specializes in developing solutions for the tobacco, quick-service restaurant (QSR) and consumer markets, welcomed the tax rate change – which ultimately equated to roughly $150,000 in tax savings for the company for the year. Don Plass, CFO, Dominion Packaging, says, “I was elated when I saw our tax bill. The new Machinery and Tools tax rate helps our business immensely. I think this is a great move by the county, and I feel that this decision will ultimately help Henrico’s tax base as more and more manufacturing companies move their businesses to the county.” 

Henrico Businesses Benefit

Lower M&T Tax rate helps manufacturing businesses in Henrico.It’s essential that manufacturing companies invest in new equipment to remain competitive, and the new lower Machinery and Tools tax is a great way for businesses to reduce operational costs. Manufacturers like Mondelēz International, Kosmo Machine and San-J International have found that doing business in Henrico is less costly than in other localities. Henrico utility rates are below the national average in most cases, and companies can realize significant savings by taking advantage of business incentives, tax credits and Enterprise Zone benefits. Learn more.

Henrico County has a history of regularly assessing its tax policy in an effort to balance the needs of its citizens with the need to provide a competitive business environment that will attract quality jobs and a solid tax base. This strategy has allowed Henrico to offer an outstanding quality of life and to become home to more jobs than any county in Virginia, other than much larger Fairfax County.

The recent M&T tax reduction is yet another example of how Henrico County works on behalf of existing businesses and looks ahead to attract new ones. From manufacturing and distribution companies, to life science firms, to corporate headquarters, find out why more businesses are finding it’s good to do business in Henrico County.

Henrico's Tax Structure Says "Welcome"
Corporate income tax: 6% – unchanged since 1972
Virginia sales and use tax: 5.3% (4.3% state, 1% local) – 7th-lowest in the nation
Virginia's cities and counties have non-overlapping tax structures; any item taxed by one location cannot be taxed by another
Henrico and Virginia enjoy a coveted AAA bond rating by Fitch, Moody’s and Standard & Poor’s