Governor Glenn Youngkin hails major step forward on tax relief for Virginia families and local businesses

On January 24, 2023, Governor Glenn Youngkin hailed the passage of his tax relief proposals, HB 2138 and 2319, in the House of Delegates which will provide savings to Virginia families and local businesses. The legislation will now head to the Virginia Senate for consideration.

“Virginians are still overtaxed, they deserve to keep more of their hard-earned paychecks, and today’s significant move by the House of Delegates means Virginians are one step closer to additional relief,” said Governor Glenn Youngkin. “The reductions in individual income tax mean 86% of taxpaying Virginians will enjoy the benefits of a lower top tax rate, and an additional 14,000 Virginians will pay no state income taxes. Reducing tax rates for businesses will result in lower taxes for approximately 475,000 resident small business owners and local businesses across the Commonwealth. Reinvigorating Virginia’s tax structure will help make the Commonwealth competitive with other states so that we can compete to win. We proved last year, when Republicans and Democrats passed our $4 billion tax relief package for Virginians, tax cuts don’t have to be a partisan issue.”

HB 2319 Income tax, state; lowers rates and raises standard deductions.

Income tax; rates and deductions. Lowers the top income tax rate from 5.75 percent to 5.5 percent for taxable years beginning on and after January 1, 2024. The bill also raises the standard deduction to $9,000 for single individuals and $18,000 for married persons for taxable years beginning on and after January 1, 2024, but before January 1, 2026.

HB 2138 Income tax, state and corporate; business interest, qualified business income deduction.

Income tax; business interest; qualified business income deduction; corporate rate reduction. Increases from 30 percent to 50 percent the Virginia individual and corporate income tax deduction for business interest disallowed as a deduction under § 163(j) of the Internal Revenue Code beginning in taxable year 2024. The bill allows an individual income tax deduction in an amount equal to 50 percent of certain federal qualified business income deductions, excluding qualified real estate investment trust dividends. The bill also reduces from six percent to five percent the corporate income tax rate beginning in taxable year 2023.