A BILL to amend and reenact § 58.1-320 of the Code of Virginia and to amend the Code of Virginia by adding a section numbered 58.1-320.1, relating to imposition of income tax.
HB188 would revise Virginia’s individual income tax structure beginning with taxable years starting on or after January 1, 2026. The bill keeps the existing lower brackets in place for income up to $17,000, but adds a new top bracket that taxes income over $1 million at 10 percent. In effect, it creates a higher marginal rate for very high earners while leaving the current rates unchanged for most taxpayers.
The bill also creates a new revenue distribution rule for the additional tax collected from income above $1 million. Under the proposed § 58.1-320.1, 4.25 percent of that revenue would be allocated among three purposes: 50 percent for additional basic aid funding for public schools, 30 percent for the Child Care Subsidy Program, and 20 percent for the Virginia Housing Trust Fund. The bill specifies that these funds may not supplant existing state funding and must increase total support for those programs.
HB188 would amend Virginia’s income tax statute, § 58.1-320, by adding a new 10 percent marginal tax rate on taxable income above $1 million and by establishing a dedicated revenue allocation section, § 58.1-320.1. It would directly affect high-income taxpayers, while channeling a portion of the resulting revenue to public education, child care assistance, and affordable housing programs. The bill would also create a statutory non-supplant requirement for those distributions, limiting how the new funds could be used by state agencies and local school boards.
The available context suggests the bill was treated as a revenue and funding measure rather than a broadly controversial policy change, but it did not advance in its introduced form. The last recorded action shows it was incorporated by Finance into HB979 (Watts) by voice vote, which indicates the committee preferred to fold the concept into another measure rather than move HB188 separately. No recorded floor votes or transcript debate were provided, so the overall sentiment appears procedural and neutral-to-supportive within committee, with the proposal being redirected into a related finance bill.
The main point of contention is likely the new 10 percent tax rate on income above $1 million, which would be a significant increase in the top marginal rate and could raise concerns about tax competitiveness, fairness, and effects on high earners. Supporters would likely emphasize the earmarked use of the revenue for schools, child care, and housing, while opponents may object to both the rate increase and the dedication of funds to specific programs. The committee action suggests the policy idea may have been acceptable in concept but preferred in a different legislative vehicle.