A wave of proposed tax increases is crashing down on Virginia, just days after Democrats gained control of the state government. The rhetoric of “affordability” used on the campaign trail now feels strikingly distant as legislation emerges that could dramatically reshape the state’s financial landscape.
The potential changes are sweeping and significant. Virginia is on track to potentially surpass California and claim the highest state tax rate in the nation, reaching a staggering 13.8%. This isn’t a gradual shift; it’s a potential leap that would fundamentally alter the cost of living for many residents.
Currently, Virginia’s state income tax sits at 5.75%. However, bills under consideration would introduce new tax brackets, increasing the rate to 8% on incomes exceeding $600,000 and 10% on those over $1,000,000. A separate proposal adds a 3.8% “net investment income tax” on income above $500,000, compounding the financial impact.
Delegate Vivian Watts, chair of the House Finance Committee, is spearheading one of the key bills, HB 979. This legislation, if passed, would establish these new, higher tax brackets beginning in 2027, directly impacting high-income earners within the state.
But the tax increases don’t stop there. Other bills are being proposed that broaden the tax base and introduce new levies. These include a tax on retail deliveries – impacting services like Amazon, Uber Eats, and FedEx – and an 11% tax on firearms and ammunition.
Even traditionally untaxed services are now in the crosshairs. Proposals aim to extend sales tax to include dry cleaning, landscaping, and other previously exempt services, further expanding the reach of state taxation.
This surge in proposed taxes stands in stark contrast to neighboring states. North Carolina boasts a rate of 3.99%, West Virginia 4.82%, and Tennessee has no state income tax at all. Virginia is poised to become an outlier, a high-tax haven in a region trending towards tax reduction.
The swiftness of these proposals, coming immediately after the change in political control, underscores a clear shift in fiscal policy. The promises of affordability now appear to be overshadowed by a substantial increase in the financial burden on Virginia’s citizens.
