RICHMOND, Va. (WAVY) — Gov. Ralph Northam is proposing $250 tax rebates for all individual tax filers in Virginia and eliminating the Commonwealth’s grocery tax after Virginia reported a record surplus in 2021 and unprecedented financial reserves of nearly $4 billion.
Individual filers would receive a one-time rebate of $250 and married couples would receive a $500 rebate.
Northam says he wanted all Virginians to benefit from Virginia’s strong economic growth, which led to a record surplus of $2.6 billion this year, but emphasized that lower and middle-income workers will see the greatest benefit with the rebate and the end of the 1.5 percent grocery tax.
“When Virginia cuts taxes next year, it should be done in a way that benefits working people,” Northam said in a statement released on Tuesday, Dec. 14. “Many professionals made it through the pandemic fine, as their work simply moved online. But workers haven’t been so lucky when their jobs require close contact with other people. Some jobs simply can’t move online — restaurant workers, early childhood educators, home care attendants, and others — and we all depend on the people who do this work. Virginia can help working people by eliminating the state grocery tax, providing one-time rebates, and giving a tax break to people who are working.”
The governor had called for the grocery tax to be ended when he campaigned in 2017 and Governor-elect Glenn Youngkin also made ending the tax a top priority.
Other tax cuts announced on Tuesday include making up to 15 percent of the federal earned income tax credit — which helps eligible low- and middle-income workers — refundable, as well as ending the “accelerated sales tax” for retailers. That tax was started after the 2008 financial crisis and required retailers to pre-pay sales tax.
Northam says the Commonwealth’s record financial reserves — which he says will be more than $3.8 billion when he leaves office — allow for the one-time rebate and ongoing tax cuts. He says the moves will reduce state revenues by a total of $2.1 billion, with $419 million in ongoing cuts.
The $3.8 billion estimated figure in reserve is nearly 17 percent of state revenues, which state officials have attributed to better than expected revenue growth, federal pandemic assistance and cautious spending during the pandemic.
Northam made the announcement in Richmond during his “Thank You, Virginia” tour, during which he’s called for a 10-percent raise for public school teachers, the largest dollar investment in public safety in the Commonwealth’s history, million of dollars for historically Black colleges and universities, and more in his proposed 2022 budget.
Youngkin’s transition aide, Macaulay Porter, shared the following statement from the governor-elect about Northam’s proposals:
Governor-elect Youngkin campaigned on reducing the cost of living, fully funding our law enforcement personnel, raising teacher pay, increasing HBCU funding, expanding broadband access, and eliminating the grocery tax for all Virginians as part of his Day One game plan, Virginians throughout the Commonwealth overwhelmingly embraced those ideals. Governor Northam’s budget proposal is a step in the right direction but does not entirely fulfill Virginians’ mandate. We appreciate the Northam administration laying the foundation for these elements of the Day One game plan so that Governor-Elect Youngkin can hit the ground running on January 15th to begin executing on his key campaign promises and finish the job.Macaulay Porter, transition aide for Governor-elect Glenn Youngkin