<p class=ldtitle>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.</p>
Summary
HB188 would revise Virginia’s individual income tax rates beginning with taxable years starting on or after January 1, 2026. The bill keeps the current lower brackets in place, but adds a new top bracket taxing Virginia taxable income over $1 million at 10 percent, while applying the existing 5.75 percent rate to income between $17,000 and $1 million. In effect, it creates a new high-income surtax structure on very large incomes while leaving the lower and middle brackets unchanged.
The bill also creates a new revenue distribution section for the additional tax collected from income above $1 million. Under that section, 50 percent of the revenue would go to additional basic aid for public schools, 30 percent would support the Child Care Subsidy Program, and 20 percent would go to the Virginia Housing Trust Fund. The bill specifies that these funds may not replace existing state funding and must increase total available funding for those programs.
Impact
HB188 would amend § 58.1-320 of the Code of Virginia to change the state income tax schedule for high earners and add § 58.1-320.1 to direct the resulting revenue to education, child care, and housing programs. It would primarily affect individuals with Virginia taxable income above $1 million, while also affecting the state budget process by earmarking a portion of the new revenue for specific programs and prohibiting supplantation of existing appropriations.
Sentiment
The available context suggests the bill was treated as a revenue and spending measure with a policy focus on funding schools, child care, and housing through higher taxes on very high incomes. There is no recorded committee debate or vote breakdown in the provided materials, but the bill’s incorporation into HB979 by the Finance Committee indicates it was considered within the broader tax and budget policy process rather than as a standalone, fully advanced measure.
Contention
The main point of contention is likely the proposed 10 percent tax rate on income above $1 million, which would be a significant increase for high-income taxpayers and could raise concerns about tax burden, competitiveness, and revenue stability. Supporters would likely emphasize the targeted use of funds for public schools, child care, and housing, while opponents would likely object to both the rate increase and the earmarking of revenue. The bill’s non-supplantation language also suggests concern that new money should supplement, not replace, existing state support.