A BILL to amend and reenact §§ 58.1-603.1, as it is currently effective and as it may become effective, 58.1-603.2, 58.1-604.01, as it is currently effective and as it may become effective, 58.1-605.1, 58.1-606.1, and 58.1-611.1 of the Code of Virginia, relating to sales and use tax; food purchased for human consumption and essential personal hygiene products.
HB703 would revise Virginia’s sales and use tax statutes so that several existing state and local add-on taxes would no longer apply to food purchased for human consumption and to essential personal hygiene products. The bill amends the state’s special regional sales and use tax provisions, including taxes tied to certain planning districts and the Historic Triangle, and it also updates the general exemption statute to make clear that these items are exempt from the affected taxes beginning January 1, 2027.
The bill also preserves and restates the structure of the local-option school construction taxes in §§ 58.1-605.1 and 58.1-606.1, which allow qualifying localities to levy sales and use taxes for school capital projects after referendum approval. Those provisions continue to exclude food and essential personal hygiene products from the local school taxes as well. The bill’s effective date is January 1, 2027, giving the Commonwealth time to implement the changes before the exemption takes effect.
HB703 would change the tax base for Virginia’s sales and use tax system by exempting food and essential personal hygiene products from the state and certain special-purpose local add-on taxes, while leaving the underlying general sales and use tax framework in place. It would affect the administration and distribution of revenues under §§ 58.1-603.1, 58.1-603.2, 58.1-604.01, 58.1-605.1, 58.1-606.1, and 58.1-611.1, and would likely reduce tax collections in the localities and special funds that currently receive revenue from those taxes. The bill does not eliminate the local school construction tax authority, but it continues to bar those taxes from being imposed on the exempted items.
The available context suggests the bill was not advanced aggressively and instead was continued to the next session in the Finance Committee by voice vote. That procedural outcome indicates the measure had not yet built enough momentum for final committee action, but it also does not show recorded opposition in the materials provided. Overall, the bill appears to have been treated as a tax policy proposal with some support for further consideration, but without a clear committee consensus for immediate passage.
The main policy issue is the loss of sales tax revenue from exempting food and essential personal hygiene products, especially for localities and special funds that rely on dedicated add-on taxes for transportation, tourism, and school capital projects. Supporters would likely emphasize consumer relief and tax fairness for necessities, while opponents may focus on the fiscal impact on state and local revenue streams and the complexity of changing multiple tax provisions at once. Another point of contention is that the bill touches both broad tax exemptions and narrowly targeted regional taxes, which can create differing interests among affected localities, tourism entities, and school-funding stakeholders.