For independent restaurants in Greater Williamsburg, a few percentage points can decide whether a month ends in the black or red. In 2026, Williamsburg raised its prepared meals tax to 6.5%, while neighboring James City County and York County remain at 4.0%.
That creates a 2.5-point local tax gap on prepared food sold in the same regional market. Here is what that means in plain dollars, what we can verify from official tax pages and Virginia law, and what we still need to track.
The core tax facts
- City of Williamsburg meals tax: 6.5%
- James City County meals tax: 4.0%
- York County meals tax: 4.0%
- State/regional sales tax in all three: 7.0%
Total customer-facing prepared-food tax: Williamsburg 13.5% versus 11.0% in James City County and York County.
What the 2.5-point gap looks like on actual checks
- $15.00 meal: Williamsburg $17.03 vs JCC/York $16.65 (difference $0.38)
- $25.00 meal: Williamsburg $28.38 vs JCC/York $27.75 (difference $0.63)
- $50.00 check: Williamsburg $56.75 vs JCC/York $55.50 (difference $1.25)
- $100.00 tab: Williamsburg $113.50 vs JCC/York $111.00 (difference $2.50)
Annual scale: how big is 2.5 points?
The differential equals roughly 2.5% of taxable prepared-food sales:
- $500,000 annual taxable sales -> about $12,500 difference
- $1,000,000 annual taxable sales -> about $25,000 difference
- $2,000,000 annual taxable sales -> about $50,000 difference
- $3,000,000 annual taxable sales -> about $75,000 difference
Formula: annual taxable sales multiplied by 0.025.
Dealer-discount detail in Williamsburg
Williamsburg also allows a dealer discount when taxes are remitted on time and accounts are not in arrears: 2% of meals tax collected.
Example at $1,000,000 taxable sales in Williamsburg: meals tax collected would be $65,000; dealer discount retained would be $1,300; net remitted would be $63,700. Important: this does not change the customer-facing 13.5% combined rate at checkout.
Compliance pressure for small operators
Local meals-tax filings are generally monthly and due by the 20th of the following month. Williamsburg states delinquency terms including a 10% penalty or $10 minimum (whichever is greater), plus 0.83% monthly interest after due dates.
What Virginia law says
- Counties are authorized meals tax up to 6% (Code of Virginia 58.1-3833).
- Meals taxes do not apply to discretionary gratuities.
- Mandatory service charges are excluded up to 20% of sales price.
- Cities and towns may impose local excise taxes, including meals taxes, under 58.1-3840.
What we can and cannot conclude right now
- Can conclude: The 2.5-point prepared-food tax gap is real and measurable.
- Should avoid over-claiming: Tax is one factor in moves and closures, but lease terms, labor, parking, retirement planning, and operating costs also matter.
- Best next reporting step: Pair the tax math with owner interviews and location-level lease/expense context.
Sources
- City of Williamsburg Finance Business Taxes: williamsburgva.gov/1070/Finance-Business-Taxes
- James City County Monthly Meals and Lodging Taxes: jamescitycountyva.gov/435/Monthly-Meals-Lodging-Taxes
- York County Prepared Food and Beverage (Meals) Tax: yorkcounty.gov/489/Prepared-Food-Beverage-Meals-Tax
- Code of Virginia 58.1-3833: law.lis.virginia.gov/…/58.1-3833
- Code of Virginia 58.1-3840: law.lis.virginia.gov/…/58.1-3840
- Virginia Tax sales/locality lookup: tax.virginia.gov/sales-tax-rate-and-locality-code-lookup
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