Spirit of Virginia September 14, 2023……..When he signs the budget this morning, Governor Glenn Youngkin will have delivered $5 billion in tax relief for hardworking Virginia families since taking office less than two years ago.
The $1 billion in tax relief included in this budget builds on the $4 billion in tax relief Youngkin delivered last year, the largest in Virginia’s history.
Youngkin’s commitment to ensuring Virginians can keep more of their hard-earned money is grounded in a simple principle: that money belongs to the people, not the government.
As Virginians continue to feel the burden of nationwide inflation, Youngkin is lowering the cost of living in the Commonwealth.
Youngkin’s pro-growth policies are also making Virginia a better place to do business and fostering job growth. Youngkin’s policies have created more than 200,000 jobs and more Virginians are working than ever before. Iconic American companies have also relocated their businesses and the jobs that come with them to Virginia because of Youngkin’s economic agenda.
Importantly, Youngkin is providing tax relief for Virginians while also providing critical funding for law enforcement, teachers and students, and behavioral health care programs.
Youngkin recently launched ALL in Virginia, a comprehensive plan to improve attendance, literacy, and learning with funding for free, high-intensity tutoring for Virginia students who continue to struggle with learning loss.
Youngkin’s “both-and” approach to Virginia’s budget is possible because his administration has been a good steward of the Commonwealth’s economy and resources. After enacting historic tax relief last year, Virginia experienced a multi-billion-dollar budget surplus which allowed Youngkin to deliver both additional tax relief and resources for key initiatives across the Commonwealth.
As Youngkin said recently, “We’re making sure that Virginia’s government is run efficiently and effectively… I think first and foremost this is recognizing it’s the people’s money, not government’s money, and we can manage it appropriately.”
IN CASE YOU MISSED IT
Tax Reductions Under Youngkin Have Been Significant
Stephen D. Haner
Governor Glenn Youngkin (R) and the legislators of both parties who have given him at least some of the tax reforms he asked for need to stop being shy and take a real victory lap. He has been in office less than two years and has diverted $5 billion from tax coffers back to Virginia’s citizens so far, with more to come in 2024 and beyond.
- Most of that was approved by the 2022 General Assembly and is now in effect for a second full tax year, but the 2023 General Assembly just sweetened the pot. The long-delayed budget compromise approved September 6th added more than $1 billion in single-shot refunds and long-term tax cuts.
- Two years ago, the standard deduction claimed by most Virginians paying income tax was $9,000 for a married couple, and that is now $16,000 and for Tax Year 2024 will go to $17,000. That saves that couple up to $1,265 over the three years. It lowers total tax income taxes more than $1 billion per year.
- People paying income tax (and remember many business operators pay on the individual tax returns) will now receive a second tax rebate. The rebate was up to $500 per couple for 2022 and will be another $400 for 2023, adding up to $900. They returned almost $2 billion. Looked at another way, that is equivalent to shielding more than $15,000 more of that couple’s joint income from tax. For many low-income Virginians, their income tax liability was wiped out entirely.
- The sales tax on unprepared food purchases was 2.5% two years ago and is now 1%. Basically, the state share of the tax is gone but the local tax remains. That was estimated to save Virginians $115 million in the fiscal year that ended June 30. Rising grocery prices make that tax break better every year.
- Two years ago, Virginia provided no special tax treatment for military retirement pay. The 2022 General Assembly created a subtraction for that income, phasing in over a few steps, for retirees above a certain age. The 2023 compromise has now extended that tax break to younger retirees, who will eventually be able to shield another $40,000 of their income from tax. That was worth almost $145 million per year with the age floor, and without the age floor it is almost a $200 million annual tax break.
- Two years ago, Virginia recognized the Earned Income Tax Credit, a federal provision that provides a major tax break for lower income people with jobs. Now Virginia’s EITC not only lowers their taxes, but for some it provides a refund, in effect a grant to supplement their income. The value of that to those families was pegged at $159 million in the fiscal year that ended June 30. It was not changed by the recent Assembly actions.
Those are five significant changes that reached virtually every Virginia household. Governor Youngkin had proposed far more tax relief, of course, and was left with only part of his plan. Far more was financially possible, and the state finds itself with unprecedented cash balances despite giving up these revenues. These were the tax breaks for which he could garner bipartisan, bicameral support.