Earned Income Tax Credit^
Income Tax Rate: Graduated 2-5.75 percent
State EITC: Yes
Refundable: No
Enacted: 2004
Formula: 20 percent of federal credit
Notes/News: During the 2010 session, the Virginia General Assembly adopted a new provision in the state budget, which decoupled the state’s EITC from federal EITC improvements in the Recovery and Reinvestment Act, resulting in a $6 million tax increase for approximately 114,000 families with three or more children. A coalition of advocates has worked to educate legislators about the importance of linking Virginia’s EITC to the enhancements to federal EITC, and the importance of making the state EITC refundable.
In December 2010, Governor Bob McDonnell committed to repealing the bill that decoupled the state’s EITC from the improvements to the federal credit, proposing amendments to the state’s two-year budget.
In February 2011, McDonnell signed legislation that improved the state EITC by ensuring that the state credit reflected the recent improvements to the federal EITC. However, due to the way the statute was written, the state EITC only conformed with the federal enhancements for the year 2011.
Beginning in the summer of 2011, advocates for Virginia’s EITC worked to educate McDonnell, his administration, and state legislators about the importance of again linking the state EITC with the federal improvements for tax year 2012. In December 2011, McDonnell included $7 million in his budget proposal to maintain conformity with the federal enhancements to the EITC.
In January 2012, the General Assembly introduced HB 1153 and SB 462 to conform the state EITC to the federal enhancements to the EITC for both tax years 2011 and 2012. The tax conformity legislation was approved without opposition, and Gov. McDonnell signed it into law on February 7, 2012.
Reports: A Kick While Down: How the State Budget Increases Taxes on Working Virginia Families, by Michael J. Cassidy and Sara Okos, The Commonwealth Institute, April 2010
Virginia: State and Local Taxes in 2007, Institute on Taxation and Economic Policy, November 2009
What’s the Impact of Taxes on Low-Income Families?, Virginia Organizing Project
A Working Plan for Virginia Tax Reform, Virginia Organizing Project
Articles: A tax increase for Virginia’s poorest (Editorial), Virginian-Pilot, April 21, 2010
Group: Virginia budget will boost working poor’s taxes, Bob Lewis, The Washington Examiner, April 15, 2010
Legislation Summaries: HB 5018 Tax Reform
Child Tax Credit^
State Credit: No
Child and Dependent Care Tax Credit^
State Credit: No
Notes/News: While Virginia does not have a state credit, it does have a deduction for care expenses equal to the amount on which the federal CDCTC is based. In order to qualify, expenses must be eligible for the federal CDCTC. The maximum deduction is $173 for filers with one child/dependent and $345 for filers with two children/dependents.
Property Tax Circuit Breaker^
Circuit Breaker: No
Reports/Fact Sheets: “Idea 9: Enact a Property Tax Circuit Breaker,” Sarah Beth Coffey and Alan Essig, Center for a Better South, Doing Better: Progressive Tax Reform for the American South, June 2006
