Large VA Tax Increase This Year Unless Legislature Acts

At a gathering of the General Assembly “money committees,” where lawmakers hear annually from the Governor and Secretary of Finance regarding Virginia’s economic forecast, Governor Northam announced a projected surplus in state revenues to the tune of $555.5 million. Even with today’s $100 billion state budgets, that’s a lot of money! This raises two obvious and important questions: Why did it happen, and what is the government going to do with it?

The reality of an oversized surplus is something that has slowly been making its way into the consciousness of policymakers and taxpayers ever since Congress passed its recent tax reform bill. Since the average family will now keep about $1,500 more of their money that would have otherwise gone to the federal government, Virginians will have more money to report on their state tax returns. That results in a default state tax increase for a significant share of Virginia taxpayers, even though the state tax rates haven’t changed.

 

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