Hampton Roads Chamber Tax Proposals Adopted

Hampton Roads Chamber Tax Proposals Adopted
Hampton Roads Chamber Tax Proposals Adopted
Hampton Roads Chamber Tax Proposals Adopted
The Hampton Roads Chamber and a large coalition of business interests presented three proposals at the beginning of the 2019 General Assembly Session.

Chamber’s Tax Proposals Adopted

The Hampton Roads Chamber and a large coalition of business interests presented three proposals at the beginning of the 2019 General Assembly Session:

  • Decouple from the federal (GILTI) Global Intangible Low-Taxed Income provisions
  • Allow full use of NOL’s
  • Decouple from Federal Interest Expense Limitation

Individual Provisions of the State of Virginia Compromise Tax Bill
(As of Feb. 15, 2019)

  • Tax refund $110/$220 in October 2019               $976M
  • Increase of standard deduction $4,500/$9,000  $360M
  • *Maintain current SALT rules                             $56M
  • *Subtraction of modification for GILTI             $13M
  • *20% Net interest expense deduction              $43M
  • Taxpayer relief fund                                                $80M
  • *Tax Code Conformity to the federal TCJA   

*Note:  Chamber recommended provisions
Source:  Thomas Jefferson Institute for Public Policy

Deductions the Key Issue/A Partial Victory for Business in Virginia

The compromise tax bill maintains a formula to reduce or cap itemized deductions known as the Pease limit.  By keeping this formula in the tax rules, the Commonwealth will collect additional revenue of $465M over six years.  This income would come from individuals with high-end incomes with substantial itemized deductions.  A 20% net interest expense deduction is included in the compromise tax bill for the Commonwealth.  (The Chamber requested a 100% net interest expense deduction)

Positives and Negatives in the Compromise Tax Bill

On the Plus Side

  • Virginia’s conformity is in time for tax season
  • All taxpayers will get a one-time rebate in October just before all 140 members of the General Assembly stand for election ($110/$220)
  • The 50% increase to Virginia’s standard deduction is permanent
  • Any additional revenues collected through 2025 will be placed in a “Taxpayer Relief Fund”

 

 

Negatives

  • Estimates are that less than half of new state tax revenue created by the federal tax code change is returned in the first several years to taxpayers
  • One provision that defines non-conformity in the Va. Code raises taxes

Tax Bills Approved as “Emergency” Legislation

HB 2529 (Hugo R-40th) was approved 95-4 in the House and 35 to 5 in the Senate.  Senate Bill 1372 (Norment R-3rd) was approved 95-4 in the House and 38 to 2 in the Senate.  The “emergency” provision will allow the bills to become effective as soon as they are signed by the Governor.

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