Today, December 20th, Governor Youngkin presented his biennial budget proposal to the Joint Money Committees members. One of the big proposals in his budget is reducing the state income tax by 12%, while in turn increasing the state sales tax overall as well as applying it to some services.
Virginia’s current sales tax rate is 5.3% statewide, however several areas have an additional regional/local tax. With this proposal the state sales tax rate will be 6.2% and regional/local taxes as outlined below. The Governor is proposing to expand the state sales tax base to include “New Economy Services,” such as digital downloads, streaming services, computer services, etc. In addition, the dealer discount rate will be doubled for qualifying dealers. The administration believes that sales tax has historically been a stable source of revenue, that is less volatile relative to other sources.
| Current General Sales Tax Rate | Proposed Sales Tax Rate | In these locations |
| 7% | 7.9% | James City CountyWilliamsburgYork County |
| 6.3% | 7.2% | Charlotte CountyDanvilleGloucester CountyHalifax CountyHenry CountyNorthampton CountyPatrick CountyPittsylvania County |
| 6% | 6.9% | Central Virginia Charles City, Chesterfield, Goochland, Hanover, Henrico, New Kent, Powhatan, and Richmond CityHampton Roads Chesapeake, Franklin City, Hampton, Isle of Wight, Newport News, Norfolk, Poquoson, Portsmouth, Southampton, Suffolk, and Virginia BeachNorthern Virginia Alexandria, Arlington, Fairfax City, Fairfax County, Falls Church, Loudoun, Manassas, Manassas Park, and Prince William |
| 5.3% | 6.2% | Everywhere else |
| Food & Personal Hygiene Items | ||
| 1% | Statewide |
It is important to note that the Legislature will now review the Governor’s proposal and will then introduce their amendments to what he has proposed. What ultimately is adopted will most likely have significant changes, and we will keep members up to date as this process moves forward.
