In 2018, the federal Tax Cuts and Jobs Act (TCJA)went into effect. Bloomberg Government described it as “the largest tax code overhaul in nearly three decades.”
One thing the TCJA did was to nearly double the standard deduction for federal income taxes.
The federal standard deduction for single filers went from $6,350 to $14,600. For married couples filing jointly, the figure rose from $12,700 to $29,200.
In 2019, Virginia began raising its standard deduction. A report from the Department of Taxation explained that was done in response to the TCJA. Since that time, the standard deduction for Virginia tax rose from $3,000 for single filers to $8,500. For married couples filing joint, the figure jumped from $6,000 to $17,000.
However, both the federal and state increases in standard deductions were temporary and are set to revert back to lower levels at the end of this year. If lawmakers at the federal and state level don’t take action, more income will be taxable for those who take the standard deduction beginning in tax year 2026.
The TCJA was a Trump measure, and he vowed to extend the federal tax cuts if he was re-elected. According to the AP, that is indeed still considered a top priority.
Virginia standard deduction bills
In Virginia, where the General Assembly is currently in session, at least five lawmakers are also trying to protect the higher standard deduction for state income taxes.
At least five Virginia legislators have introduced bills during this session of the General Assembly to prevent the state’s standard deduction from being lowered.
Delegate Joseph McNamara introduced HB 1551 and Senator Richard Stuart introduced SB 845. These mirroring bills call for the current standard deduction levels to be made permanent for state tax effective July 1, 2025.
With SB 782, Senator David Suetterlein seeks to eliminate the sunset date for standard deduction and the refundable earned income tax credit.
Senator Ryan McDougle introduced SB 951 to eliminate sunset date for the current standard deductions, the refundable earned income tax credit, and the elective income tax on pass-through entities.
Delegate Vivian Watts proposal with HB 1754 is to push further, hiking the standard deduction to $12,000 for singles and $24,000 for couples. Her bill also calls for the creation of a new 7% percent income tax bracket for taxable state income over $600,000.
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