SB 1378 would create a new Virginia individual income tax credit for taxpayers with dependent household members under age 13. For taxable years beginning on and after January 1, 2025, and before January 1, 2030, eligible taxpayers could claim a one-time credit of $300 for each qualifying child, with only one credit allowed per child. The credit is limited to taxpayers with family Virginia adjusted gross income of $100,000 or less.
The bill also specifies how the credit would work for different taxpayers. Virginia residents whose credit exceeds their tax liability would receive a refundable payment from the Tax Commissioner, while nonresidents and certain other taxpayers would receive only a nonrefundable credit up to their Virginia tax liability. The Tax Commissioner would be required to issue guidelines for claiming the credit, and those guidelines would be exempt from the Administrative Process Act.
Impact
The bill would add a new section, § 58.1-339.15, to the Virginia Code and create a new child tax credit within the state individual income tax system. It would affect taxpayers with young dependents, especially lower- and middle-income Virginia residents with family Virginia adjusted gross income at or below $100,000, and would require the Department of Taxation to administer refunds and issue implementation guidance. Because the credit is refundable for qualifying residents, it would have a direct revenue impact on the Commonwealth and could reduce state income tax collections during the 2025-2029 taxable years.
Sentiment
The available voting history suggests the bill did not advance out of committee and was passed by indefinitely in the Senate Finance and Appropriations Committee on a 15-0 vote. That result indicates no recorded opposition in the committee vote, but also no willingness to move the proposal forward. No committee transcript was provided, so there is no additional recorded debate or public rationale in the materials beyond the final committee action.
Contention
The main policy issues likely concern the fiscal cost of a refundable child tax credit and whether the income cap, age cutoff, and temporary five-year duration are the right design choices. The refundable feature for Virginia residents is the most significant budgetary issue because it can generate payments even when tax liability is low or zero, while the nonrefundable treatment for nonresidents and certain other taxpayers creates different treatment across filer categories. The committee’s unanimous vote to pass the bill by indefinitely suggests the proposal did not generate recorded partisan conflict, but it also indicates hesitation about adopting the tax expenditure.