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By Giulia Carbonaro
Senior Reporter
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Virginia Democrats have pushed forward proposals to give all taxpayers in the state immediate, one-time tax rebates, rejecting Republican Governor Glenn Youngkin's $1.1 billion plan to introduce a permanent car tax relief.
The state House of Delegates and Senate appropriations committees, both led by a majority of Democrats, have also introduced bills that would introduce a child tax credit and make part of the earned income tax refundable while voting down Youngkin's idea to eliminate taxes on tips.
Newsweek reached out to Youngkin's office via email for comment on Monday morning.
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Why It Matters
Tax rebates are given to taxpayers for an excess amount paid in taxes during the year. In 2023, Virginia taxpayers received a rebate of up to $200 for individual filers and up to $400 for joint filers—the same amount now suggested by the two committees.
While Virginia's GDP grew by 2.1 percent between 2019 and 2024 and reached $601.2 billion last year, according to IBIS World, this year's tax rebates are likely to help Virginians struggling with lingering high prices. Recent Census data showed that over 2.3 million adults in the state were struggling to pay for their living expenses as of summer 2024, Axios reported.
What To Know
On Sunday, the House and Senate committees forwarded similar plans to adjust the final year of the state's two-year budget signed by Youngkin in May 2024, including one-time tax rebates for Virginia taxpayers.
According to the proposed amendment, individual income tax filers would receive $200 by October, while joint filers would get $400. Overall, the tax rebate will total $977.8 million, according to state Senator L. Louise Lucas.
Newsweek reached out to Lucas via email for comment on Monday morning.
Additionally, both committees want to increase Virginia's standard deduction: the Senate suggests raising it by $250 for individual filers, bringing it up to $8,750 and by $500 for joint filers, reaching $17,500. Lawmakers also want to make Virginia's earned income tax credit fully refundable at 20 percent of the federal credit. While the two committees have worked on similar plans, the House has tentatively passed more tax cuts than the Senate.
Crucially, these moves would provide tax relief to Virginia taxpayers faster than Youngkin's proposal.
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The governor's plan, now dead in the water, would have eliminated the car tax for lower- and middle-income residents by funding rebates for three years starting from next year's tax filing season. The proposal would have provided income tax rebates to nearly 1.9 million taxpayers, Virginia Mercury reported, targeting individuals earning up to $50,000 in adjusted gross income and joint filers with incomes up to $100,000.
Youngkin's idea was voted down by both legislative chambers at the end of January.
What People Are Saying
Virginia Governor Glenn Youngkin, in his State of the Commonwealth address on January 13: "To keep Virginia booming with more jobs and more opportunity, we must continue to lower the cost of living with tax relief. Together, we've provided Virginians with $5 billion in tax relief. Leadership from both sides has said in recent weeks that we need to provide more tax relief and lower the cost of living."
He added: "No surprise, but I agree—and that starts with the most hated tax in America: Virginia's car tax!"
Youngkin, in a statement: "While there are areas where we agree and others where we may disagree, we will go to work to deliver for Virginians, as we have done the past three years."
Virginia state Senator L. Louise Lucas, who chairs the Virginia Senate Finance Committee, in a statement: "Working families and individuals need immediate relief—again, immediate relief. To that end, I do not agree with the details of the governor's approach."
What Happens Next
The two committees' budget bills will head to their respective chambers next; if passed, they will move on to the other chamber for consideration. If approved, they'll then continue to a conference committee.
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