A BILL to amend and reenact §§ 58.1-320, 58.1-322.02, 58.1-322.03, and 58.1-339.8 of the Code of Virginia and to amend the Code of Virginia by adding in Article 3 of Chapter 3 of Title 58.1 sections numbered 58.1-339.15 and 58.1-339.16, relating to state taxation in the Commonwealth.
HB1074 makes a broad set of changes to Virginia’s individual income tax code. The bill would revise the state income tax rate structure beginning in taxable years starting January 1, 2027, adding a new top marginal rate of 7.75 percent on income over $1 million while keeping the lower brackets largely unchanged. It also updates the standard deduction for non-itemizers, increases the refundable earned income tax credit option over time, and makes several technical and conforming changes to existing subtraction and deduction provisions.
The bill also creates two new refundable credits. First, it establishes a health insurance premium tax credit for taxpayers with Virginia adjusted gross income at or below 250 percent of the poverty guidelines, available for tax years 2026 through 2030 and tied to the difference between federal premium tax credit amounts in 2025 and 2020. Second, it creates a child tax credit of $400 per dependent child under age 6 for taxpayers with family Virginia adjusted gross income of $100,000 or less, also available for tax years 2026 through 2030. Both credits are refundable for residents and subject to administrative guidance from the Tax Commissioner.
In addition to the new credits, HB1074 expands or updates a number of existing income tax subtractions and deductions, including provisions affecting military retirement and benefits, long-term care insurance, age-based deductions, and certain education- and housing-related savings accounts. It also preserves and restates many existing Virginia subtractions for items such as Social Security, disability income, unemployment benefits, and various specialized categories of income. Overall, the bill would materially alter how Virginia taxes individual income and would increase the number of taxpayers eligible for state tax relief.
The bill’s impact on state law would be significant because it amends core provisions governing the individual income tax, including the rate schedule, standard deduction, low-income credit, and multiple subtraction and deduction rules in Title 58.1. It would also add two new sections to the Code of Virginia creating refundable credits administered by the Department of Taxation. The measure would likely reduce state revenue by expanding tax relief for lower- and middle-income households, families with young children, and taxpayers purchasing health insurance, while increasing taxes on very high-income earners through the new top bracket.
The available legislative context suggests the bill has not advanced far and has been met with limited recorded debate, as it was continued to the next session in the Finance Committee by voice vote. Because there are no committee transcripts or recorded roll-call votes, there is little direct evidence of formal support or opposition in the materials provided. The main points of contention are likely to be the new million-dollar tax bracket, the cost and refundability of the new credits, and the broader revenue effects versus the bill’s tax relief goals.
HB1074 would amend Virginia’s individual income tax provisions in Title 58.1 by changing the rate schedule, increasing the standard deduction for non-itemizers, revising the low-income credit, and adding new refundable credits for health insurance premiums and young children. It would also modify or extend numerous existing subtractions and deductions, affecting taxpayers who receive military pay and retirement income, Social Security, disability income, long-term care insurance, education-related expenses, and certain savings-account or investment-related income. The bill would likely lower taxes for many eligible households while increasing liability for taxpayers with income above $1 million.
The bill appears to have had limited visible debate in the available record, and its last action was a continuation to the next session in the Finance Committee by voice vote. That suggests neither strong recorded momentum nor a decisive floor-level controversy in the materials provided. Substantively, the bill combines tax relief for families and lower-income taxpayers with a new higher bracket for very high earners, so it likely draws mixed reactions depending on fiscal and ideological priorities.
The most likely areas of contention are the new 7.75 percent top marginal tax rate on income over $1 million, the refundable health insurance premium credit, and the refundable child tax credit, all of which would reduce or redistribute tax burdens and affect state revenue. Supporters would likely emphasize affordability, family support, and health coverage assistance, while opponents would likely focus on revenue loss, administrative complexity, and the precedent of expanding refundable credits. Because there are no transcripts or votes, specific named opponents or supporters are not identified in the record provided.