Virginia legislative leaders have reached an agreement, endorsed by Democrats and Republicans in the House and Senate along with Governor Ralph Northam, that would return $976 million to taxpayers during this biennium and would allow the state to begin processing more than a half-million tax returns that already have been filed for this season.
Under the plan, every Virginian who pays personal income taxes will see lower taxes under this compromise plan. Importantly, the legislation provides conformity with the new federal tax law which allows Virginia tax filers to file their taxes in a timely manner.
The only part of our tax structure where the legislators broke from the federal tax changes and “deconformed,” was to reject the $10,000 cap on the State and Local Tax Deduction (known as “SALT”).
Deconforming from the federal cap will allow taxpayers to continue receiving higher Mortgage Interest Deductions and property tax deductions. Additionally, the standard deduction has been increased. For single filers, it will be increased 50% from $3,000 to $4,500 and for joint filers it will be increased from $6,000 to $9,000. Because these changes are not able to be implemented in time for this tax season, in October every taxpayer will receive a check for $110 or $220 for joint filers.