A BILL to amend and reenact § 58.1-3506 of the Code of Virginia, relating to personal property taxation; classifications; major energy consumer equipment upgrades.
HB563 amends Virginia’s personal property tax classification statute, § 58.1-3506, by adding a new separate class of tangible personal property for certain generating equipment purchased on or after July 1, 2026. The new classification applies to equipment used to upgrade a major energy consumer’s backup or standby power systems, specifically where the upgrade replaces equipment that does not meet EPA Tier 2 emission standards with selective catalytic reduction generators that meet or exceed EPA Tier 4 standards, or where the equipment is installed to meet applicable New Source Performance Standards enforced by the Department of Environmental Quality.
The bill defines a “major energy consumer” as a commercial, industrial, or manufacturing entity with an actual or projected minimum electrical requirement of one megawatt or more per month that participates in a local electric cooperative or a demand response program. It also ties the new classification to the existing local taxation framework in § 58.1-3506, under which localities may tax different classes of personal property at different rates, subject to statutory limits. In practical terms, the bill would allow local governments to classify this upgraded backup-power equipment separately for tax purposes, potentially affecting how such property is assessed and taxed at the local level.
The bill would amend § 58.1-3506 of the Code of Virginia by adding subdivision A 49 to the list of separately classified tangible personal property and by incorporating that new class into the rate limitations in subsection B. This would give counties, cities, and towns authority to tax qualifying backup-power upgrade equipment at a rate no higher than the general tangible personal property rate, while preserving the existing structure that allows different tax treatment for specified classes of property. The measure would primarily affect large commercial, industrial, and manufacturing taxpayers that invest in cleaner backup generation systems, as well as local assessors responsible for classifying and taxing such equipment.
The available legislative history suggests limited visible debate, but the bill was not advanced out of Finance and was continued to the next session by voice vote. That procedural outcome indicates the measure did not generate enough consensus for immediate passage, though it also does not show recorded opposition in the materials provided. Overall, the bill appears to have been treated as a technical tax-classification proposal with a targeted policy purpose rather than a broadly controversial measure.
The main policy issue appears to be whether local tax law should create a special classification for expensive backup-power equipment used by large energy users, effectively providing a tax preference for emissions-related upgrades. Potential points of contention include the fiscal impact on local revenues, whether the tax classification would function as an incentive or subsidy for large industrial users, and whether the eligibility criteria are narrow enough to target only the intended projects. No specific committee remarks or recorded votes are provided, so the exact positions of supporters and opponents are not documented in the available materials.