More than 2.7 million Virginians are receiving tax refunds in the mail to repay them for an inadvertent tax increase last year that was caused by a change in the federal tax code.
“The Virginia Department of the Treasury started printing and mailing the refund checks in mid-September,” Stephanie M. Benson, senior communications specialist for the Virginia Department of Taxation, told The Center Square via email.
“The checks of up to $110 for individual filers and up to $220 for a married couple filing jointly are scheduled to be mailed by Oct. 15, 2019,” Benson said. “All total, it is estimated that about $430 million will be provided to eligible taxpayers.”
Benson said that two factors can reduce a person’s refund: owing Virginia state taxes in 2018 or previous years and owing money to Virginia local governments, courts or other state agencies. The state will take money out of the refund to pay down those bills.
Although the federal Tax Cuts and Jobs Act reduced federal taxes for most Americans, the language in Virginia tax code led many residents to face an unintended state tax increase. Virginia’s standard deduction rate was lower, and state law requires that Virginians take the same federal and state tax status. Many in the commonwealth were forced to itemize less and pay more in state taxes.
The General Assembly then passed legislation that increased the standard deduction to mirror the federal rate and paid for a refund for the previous year.
Stephen Haner, a senior fellow for state and local tax policy at the Thomas Jefferson Institute for Public Policy, told The Center Square that the tax refund is good for Virginians, but that the General Assembly should have passed more long-lasting tax reforms to save taxpayers money. The institute is a free-market think tank based in Virginia.
“The $400 million or so will be welcome, and probably some of if it will end up with restaurants or retailers, but it remains disappointing that the General Assembly didn’t provide a more lasting response to the state revenue boost created by the Trump tax cuts,” Haner said. “It was a lost opportunity. The state did increase the standard deduction about 50 percent, but it could have done 100 percent.”
Gov. Ralph Northam initially intended to use the new money to fund additional spending initiatives, but later changed his position to support the tax refund.