RICHMOND, Va. (WRIC) — In two expected party-line votes, the Virginia House of Delegates passed key proposals in Gov. Glenn Youngkin’s plan for $1 billion in tax cuts.
The House passed legislation Tuesday to reduce the top income tax rate from 5.75% to 5.5% — which is estimated to cut revenues by roughly $333 million in the 2024 fiscal year.
The measure also proposes raising the standard deduction for individual tax filers from $8,000 to $9,000 and $16,000 to $18,000 for joint filers — which comes with an expected $95 million impact over the two-year budget cycle.
The 100-member chamber also approved a proposal to cut the corporate income tax rate from 6% to 5%, a move estimated to lower revenues by $362 million over the next two fiscal years, and provide a 10% tax credit to some small businesses in Virginia.
Both votes were 52-48, with all House Republicans voting in support and all Democrats in the chamber voting against the proposals.
Virginia House Democrats criticized Republicans for Tuesday’s votes, accusing them of jamming through bills that will “benefit big corporations and the wealthy.”
“I always say: don’t tell me your priorities. Show me your budget and I’ll tell you your priorities,” Democratic House Leader Don Scott (Portsmouth) said in a statement. “The Republican tax bill is a giveaway to corporations – which will either mean tax hikes for families or deep cuts to services.”
The measures are expected to face intense pushback in the Democratic-controlled Virginia Senate, where similar proposals from state senators will go before the Finance and Appropriations Committee on Wednesday.
In a statement, Gov. Youngkin repeated his belief that “Virginians are still overtaxed” but lauded Tuesday’s votes in the House as a step closer towards his goal of providing tax cuts.
“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,” the governor said Tuesday.
Youngkin added that reducing the tax rates for businesses will help lower costs for roughly 475,000 small businesses and their owners across Virginia.
The governor has talked at length about adopting tax relief measures to put Virginia in a position to compete for new developments and attract companies and people to the commonwealth.
Democrats have raised concerns that Youngkin’s tax relief program would keep Virginia from paying for unmet needs, including funding for school construction. They have also shared doubts that the cuts would incentivize others to come to Virginia.
Youngkin has also proposed to increase spending on public education, bolster the state’s behavioral health services and for other commitments. He has disputed that his tax cuts would limit Virginia’s ability to fund the investments.
While the House approved the proposals Tuesday, concessions are expected once negotiations with Democrats begin in earnest.
Last year, Youngkin sought $5 billion in tax cuts and a full repeal of the state’s grocery tax. In the end, lawmakers agreed to $4 billion in cuts and eliminating the state’s portion of the grocery tax, maintaining localities’ tax rate on groceries.
“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,” Youngkin said.
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