Starting July 1, 2022, a number of new state and local tax laws go into effect in Virginia.
Some of the highlights include:
Reduced sales tax on groceries
Beginning January 1, 2023, sales tax on food for home consumption and certain essential personal hygiene products will decrease to 1% statewide.
Increased standard deduction
Beginning with 2022 Virginia individual income tax returns, the standard deduction will increase to $8,000 for single filers and $16,000 for married couples filing jointly) provided certain revenue targets are met. If those targets are not met, then the standard deduction will increase to $7,500 and $15,000, respectively.
Refundable Virginia Earned Income Tax Credit
Beginning with 2022 Virginia income tax returns, you may be able to claim a refundable credit equal to 15% of your federal Earned Income Tax Credit (EITC).
Subtraction for military retirement income
Beginning with your 2022 Virginia income tax return, you may be able to claim a subtraction for certain military benefits. The maximum amount of the subtraction that may be taken in 2022 is $10,000. Qualifying military benefits include:
- Military retirement income received for service in the Armed Forces of the United States,
- Qualified military benefits received pursuant to a section of the Internal Revenue Code regarding certain military benefits,
- Benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States under the Survivor Benefit Plan program established by the U.S. Department of Defense, and
- Military benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States.
Individual income tax rebates
Qualifying taxpayers who file by November 1 may be eligible for a one-time rebate of up to $250 for single filers and up to $500 for joint filers.
Elective Pass-Through Entity (PTE) Tax
Qualifying pass-through entities, (e.g. S-corporations, LLCs, partnerships, etc.) may file and pay their tax liability at the entity level, rather than passing it through to their members. Members of the PTE will be eligible for a credit equal to the amount of Virginia tax paid by the PTE. Members of the PTE may also be eligible for a credit for taxes paid by the PTE to other states with substantially similar laws.
For more information and a complete list of 2022 state and local tax legislation, please see the 2022 Legislative Summary.