When the federal government changes its tax code, Virginia usually follows. But changes made by President Donald Trump in the One Big Beautiful Bill could press that tradition.
If you ask US Treasury Secretary Scott Bessent about affordability, he’s got an answer:
“In 2026, we’re going to see very substantial tax refunds in the first quarter," Bessent told Trump at a recent cabinet meeting. "So, the best way to address the affordability crisis is to give Americans more money in their pockets.” :11
The One Big Beautiful Bill changed rules around the standard deduction and could lead to as much as an extra $2,000 after you file by some estimates.
But state taxes? That’s a different story.
Delegate Vivian Watts, chair of the House Finance Committee, said while conforming Virginia’s rules to the new federal standards may make taxes easier, some proposed cuts could cost the state billions.
Among cuts Watts thinks won't expand to the state? A retroactive rebate for corporate research that could cost Virginia $800 million over the next 3 years.
“They’ve already done the research, they don’t need the incentives, it’s just money given to these particular corporations,” Watts told Radio IQ, calling some of Trump's proposed tax changes a gift to the rich.
"The continuation of 2017 Trump tax cuts continues high advantages to the top two percent" she said. "The new cuts continue the emphasis on high income."
"There are a number of areas where we didn't conform in 2017 and there's no reason to believe we'll be conforming now," she added.
Stephen Haner is with the conservative Thomas Jefferson Institute. He wasn’t surprised to hear Watts’ hesitation on some business cuts, but he noted some of the personal tax breaks could be politically complicated.
New breaks like no tax on tips or overtime, could cost Virginia almost $900 million in lost state revenue. But failing to conform could burn voters who could collect those funds.
“There are a lot of folks out there who will be upset when they have a deduction on their federal taxes for their tips, but they have to pay taxes to the states on their overtime,” Haner said.
And differences between state and federal tax returns will complicate filing. Haner warned those differences are more than a just a math burden, it can lead to errors.
"The idea is to keep them simple," he said.
As for 2026 and Bessent's promise of affordability.
"Without adding those deductions, Virginians may not see much change on their pay stubs," he said, before noting most people will use the standard deduction anyway.
"And you'll see at least another $2000," he said.
Outgoing Governor Glenn Youngkin will get the first crack at the 2026 budget, set for release next month.
Governor-elect Spanberger and her new Democratic majorities will have hard decisions to make once the session kicks off in January.
This report, provided by Virginia Public Radio, was made possible with support from the Virginia Education Association.
