<p class=ldtitle>A BILL to amend and reenact § 58.1-400 of the Code of Virginia, relating to corporate income tax rate.</p>
Summary
SB696 would reduce Virginia’s corporate income tax rate in stages over several years. Under current law, the corporate income tax rate is 6 percent; this bill would keep that rate for taxable years beginning before January 1, 2026, then lower it to 4.75 percent for taxable years beginning in 2026, 3.5 percent for taxable years beginning in 2027, and 2.25 percent for taxable years beginning in 2028 and thereafter.
The bill is narrowly focused on § 58.1-400 of the Code of Virginia and would change the tax imposed on corporations organized under Virginia law and foreign corporations with Virginia-source income. Its effective date is limited to taxable years beginning on or after January 1, 2026, so it would not alter prior tax liabilities but would materially reduce future corporate income tax collections if enacted.
Impact
SB696 would amend Virginia’s corporate income tax statute to create a phased-in rate reduction for corporations, lowering the tax burden on both domestic and foreign corporations with Virginia taxable income. The practical effect would be to reduce state general fund revenue over time while increasing after-tax income for affected businesses. Because the bill amends a core tax provision, it would directly affect corporate tax filings, revenue forecasts, and the state’s fiscal outlook beginning with tax years starting in 2026.
Sentiment
The available voting history suggests the bill did not advance out of committee, as it was passed by indefinitely in Finance and Appropriations on a 9-4 vote. That result indicates there was meaningful support for the proposal, but not enough to move it forward. With no committee transcript available, the public discussion record here is limited, but the vote pattern suggests the bill was somewhat favorable among a majority of committee members while still facing substantial opposition.
Contention
The main point of contention is the fiscal impact of lowering the corporate income tax rate. Supporters would likely view the bill as a business tax cut that could improve competitiveness and investment, while opponents would likely focus on reduced state revenue and the effect on funding for public services. The 9-4 committee split shows disagreement over whether the benefits of a lower corporate tax rate outweigh the budgetary cost to the Commonwealth.