By OLIVIA DIAZ Associated Press/Report for America
RICHMOND (AP) — Virginia Gov. Glenn Youngkin proposed a state budget plan on Wednesday to provide tax relief on tips and cars, measures his Republican administration touted as giving money back to middle- and lower-income workers.
County Manager Mark Schwartz has been directed to consider both program cuts and tax increases as he works to fill a fiscal 2026 budget gap currently estimated at $30 million to $40 million.
County Board members on Tuesday night (Dec. 17) voted unanimously to approve budget guidance providing Schwartz the ability to propose tax increases he deems necessary. That could include another increase to the real-estate tax rate.
Gov. Glenn Youngkin (R) says Virginia workers shouldn’t pay state tax on tips they get from customers.
Adopting the policy — supported on a federal level by both president-elect Donald Trump and vice president Kamala Harris during the recent election — would let tipped workers keep an extra $70 million each year throughout the Commonwealth, the governor’s office said in a press release Monday.
Youngkin says he is proposing the tax change in his upcoming budget. GOP state senators, meanwhile, signaled their support for Youngkin’s proposal in statements Monday, after introducing a bill last week to eliminate state income tax on gratuities.
The governor’s press release is below.
Governor Glenn Youngkin today announced a budget proposal to exempt service tips from Virginia’s state income tax. This proposal will return an estimated $70 million annually to the pockets of hardworking Virginians to further deliver on Governor Youngkin’s commitment to lower the cost of living for working families across the Commonwealth. This builds on the more than $5 billion in tax relief already delivered for Virginians under his administration.
“We have delivered over $5 billion in tax relief to date, and we remain committed to lowering the cost of living for hardworking Virginians. It’s their money, not the government’s,” said Governor Glenn Youngkin. “By removing tips from taxable income, it will directly increase the take-home pay of hundreds of thousands of Virginians and give them more buying power, which in turn will improve financial stability, stimulate local economies, and honor the value of their hard work.”
The Virginia Department of Taxation and the Virginia Employment Commission estimate that more than 250,000 Virginians within the food service industry, personal service industry (such as hair stylists), and hospitality industry (such as bellhops and concierges) could benefit from the proposed tax relief. Workers who receive tips from their employment in other industries would also benefit.
Virginians who earn tips will be able to claim a deduction on their state tax return, provided the income is included in their federal adjusted gross income. The Department of Taxation will use IRS data and employer-reported W-2 information to ensure compliance.
The Commonwealth’s robust financial health, marked by record employment levels, rising revenues and surpluses, robust reserves, and a AAA bond rating, enables the Commonwealth to implement meaningful tax relief for Virginians while maintaining fiscal responsibility and sustaining vital investments in public services.
Critics of exempting tips from tax have a number of reasons why they think it’s a bad policy, however, from issues of fairness to a loss of revenue to the risk of distorting labor markets.
“It’s not fair to subsidize Le Cirque waiters but not McDonald’s customer service associates with tax-free tips. Or to so favor a hotel’s housekeeper, but not a homeowner’s house cleaner,” the Tax Policy Center wrote in September. “Or, for that matter, traditional employees and not independent contractors in the growing gig economy.”
What do you think? Should Virginia exempt service tips from state income tax? Or do you oppose the governor’s proposal?
Falls Church homeowners likely will face higher real-estate tax bills in 2025-26 even if city leaders are able to shave a few pennies off the tax rate.
With no rate change, the typical city homeowner would face an estimated median $529 tax increase owing to higher assessments, the result of a still-robust housing market.
Arlington property owners next year likely will have a number of new ways to claim rebates against the government’s new stormwater fees.
County staff have proposed two additions to existing opportunities to lessen the annual stormwater fee, which is based on a property’s impermeable surface and for residential properties averaged $258 this year.
Arlington homeowners may find themselves facing a double-whammy at tax time again in 2025.
County officials say they are anticipating year-over-year tax-revenue growth of 1.7% to 2.5% for the fiscal year that begins next July, but growth in government expenses would be in the 3%-to-4% range.
The increasing cost of vehicles was a key driver in Arlington’s tax-delinquency rate showing a rare year-over-year uptick in new data.
“Many people do not contemplate the annual tax consequences” of vehicle ownership, county Treasurer Carla de la Pava said in a Tuesday briefing to the Arlington County Board.
Virginia’s three-day tax holiday begins next Friday, Aug. 2, marking a weekend of discounted shopping for back-to-school season and hurricane preparedness supplies, among other goods.
Starting Friday and ending on Sunday, Aug. 4, eligible items will be sold across the state without sales tax.
The average Arlington homeowner will see a significant tax increase as part of the new, $1.65 billion county budget.
The Arlington County Board on Saturday approved the FY 2025 budget, which includes a 2 cent tax rate increase. Paired with a 3.3% increase in home values, it will raise property taxes for the average homeowner $430 annually — a 5.3% increase.
The Arlington County Board is considering a potential property tax hike that could be even higher than what County Manager Mark Schwartz proposed.
Board members yesterday (Tuesday) voted 5-0 to advertise hearings on a maximum property tax rate of $1.038 per $100 of assessed value, a 2.5 cent increase from 2023. That is 1 cent higher than the increase of 1.5 cents that Schwartz proposed in his $1.62 billion budget proposal for Fiscal Year 2025.
Several measures designed to combat Arlington’s persistently high office vacancy rate are slated for discussion next month.
On the table are expanded opportunities for shared and offsite parking, as well as more lenient parking requirements for fitness centers. Officials are also set to consider whether to allow large media screens for outdoor entertainment in some business districts.
The value of residential properties is up in Arlington, but the torrid growth of past years has slowed.
Arlington County announced today that residential property assessments are up 3.2% for 2024. The overall property assessment growth was 2.5%, with commercial properties up 1.6%. New construction contributed significantly to the overall growth.
