Virginia Budget Deal Includes $4 Billion in Tax Cuts

A proposed budget deal General Assembly negotiators reached this week would cut taxes by $4 billion over three years, increase state employee and teacher pay by 10% over two years and contribute up to $470 million in state funds to widen a 29-mile stretch of Interstate 64 between Richmond and Williamsburg.

The tax cuts include one-time rebates of $250 for individual taxpayers and $500 for families this year, a 78% boost in the standard deduction on state income taxes, a larger deduction for military retirement income, and a refundable tax credit for low-income working families.

But it does not include the repeal of the 1% local option sales tax on groceries — only the 1.5% state portion of the tax. It also does not include a three-month suspension of the state tax on gasoline that Gov. Glenn Youngkin had wanted as part of a larger $5.5 billion tax relief package in his first year in office.

The compromise agreement between negotiators for the House of Delegates and Senate came nearly three months after the legislature ended its 60-day session on March 12 without a revised budget for this year or a new two-year budget that will take effect on July 1.

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