The arrival of W-2 forms in the mail reminds us, even if we may have momentarily tried to forget, that tax season is upon us. This is no ordinary tax year, however. Massive changes in federal tax laws will result in significant changes at the state level as well. No one can speak with authority as to what the differences will be for an individual taxpayer as the General Assembly has not revised state tax law to reflect the federal changes.
The situation we are in is not new. Anytime the Congress makes changes in federal tax policy, the state must adjust to those changes and decide whether to adopt the federal policy or to put in new state provisions. As a conformity state, Virginia has generally followed federal policy allowing taxpayers to file state returns using the information on their federal form.
The difference this year is that the federal changes are so massive that conformity is not realistic without major changes in the way state forms are filed. Adding to the fact that the forms may be different is that there are major differences between the way deductions and credits have been handled and what will constitute taxable income. High-income taxpayers that were the winners with the federal changes could significantly reduce monies to a state that is already struggling to meet its obligations to funding schools, mental health programs and other priorities.
Essentially, Gov. Ralph Northam proposed that additional revenues be used for investments in education, workforce development, expanded broadband and targeted tax relief to those who work at the lowest wages. Republicans have proposed a plan to return more monies to taxpayers, but there is strong concern that the Republican plan will make big dents in the state budget.
All agree that a decision needs to be reached soon for taxpayers to file their tax forms as soon as possible and as accurately as possible. In past years as many as 650,000 taxpayers have filed in the first 10 days of February.
I am the patron of a bill supported by Northam that would make a portion of the Earned Income Tax Credit (EITC) refundable to taxpayers based on their income and family size. The current Virginia EITC set at 20 percent of the federal EITC does not allow for a refund of its full value as is done in 23 other states. Under the bill I introduced, it is estimated that as much as $250 million would be returned to the pockets of hard-working Virginians who are at the lowest pay levels. This helps not only those workers, but — since low-income residents typically spend that money on goods and services — it boosts the local economy as well.
There is a sense of urgency in the General Assembly that this issue needs to be resolved as soon as possible, because it impacts every household. Not only is there a great deal of confusion, but that confusion will be multiplied many times as people start to prepare their returns with incomplete directions. The challenge has been known for several months. Tax season is upon us. Our tax policy needs to be resolved now.
Reston Association (staff photo by Jay Westcott) Reston Association is seeking candidates for its 2024 Board of Directors’ election. Four seats are open for the election, which will take place…
Live Fairfax is a bi-weekly column exploring Fairfax County. This recurring column is sponsored and written by Sharmane Medaris of McEnearney Associates. Questions? Reach Sharmane at 813-504-4479. Embarking on the holiday season demands…
Gov. Glenn Youngkin announces a “Building Blocks for Virginia Families” plan to increase funding for early childhood education (Official Photo by Christian Martinez, Office of Governor Glenn Youngkin) With the…
A renovation of Lake Thoreau pool has been completed (courtesy Reston Association/YouTube) The renovation of Reston’s Lake Thoreau pool has officially been completed in time for the 2024 pool season….