Republicans in the Virginia General Assembly have delivered on a key promise to return $976 million from the federal Tax Cuts and Jobs Act (TCJA) to taxpayers. Passed earlier this week by an overwhelming majority, the GOP-led bills in the House and Senate were approved as “emergency” legislation, meaning their provisions will become effective as soon as they are signed by the governor.
The House Republican Caucus released a video highlighting the tax plan, explaining how it affects over four million Virginians:
Under the plan, the Commonwealth’s standard deduction would be increased by 50 percent – the first such change for individual filers since 1989 – rising from $3,000 to $4,500 for individuals, and from $6,000 to $9,000 for couples. This provision would primarily benefit lower and middle-income taxpayers as it applies across the board.
The plan also preserves existing state law on the deductibility of state and local taxes (SALT) instead of capping it at $10,000, thus preventing a double tax hike on homeowners.
The package provides additional tax refunds of $110 for individuals and $220 for couples in October of this year, totaling $420 million in tax relief. Over the next two years, married couples will receive an average of $392 in tax relief.
Moreover, 70 percent of all rebates will go to taxpayers making $100,000 or less.
As Republicans have reiterated that the tax relief plan will not cost the state “one penny,” it includes subtraction modifications for global intangible low-taxed income (GILTI), a deduction for 20 percent of net interest expenses, and places $189 million in a Taxpayer Relief Fund.
Despite providing tax relief, House Republicans were also able to secure a five percent pay raise for teachers, which will be included in the final budget.
By conforming Virginia tax law to the recently-altered federal law, Virginians will be able to file their state taxes without complications this May.