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2019 SESSION

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HB 2529 Income tax, state; conformity of taxation system with the IRC, taxable income deductions, etc.

Introduced by: Timothy D. Hugo | all patrons    ...    notes | add to my profiles | history

SUMMARY AS PASSED:

Income tax; conformity. Advances conformity of the Commonwealth's tax code with the federal tax code to December 31, 2018, effective starting in taxable year 2018. Starting in taxable year 2019, the bill deconforms from the provisions of the federal Tax Cuts and Jobs Act (TCJA) that limit the deduction for state and local taxes and that suspend the overall limit on itemized deductions.

The bill establishes income tax subtractions starting in taxable year 2018 for Global Intangible Low-Taxed Income (GILTI) and for one-fifth of the amount of business interest that is disallowed as a deduction from federal income tax.

The bill increases the standard deduction to $4,500 for single individuals and $9,000 for married persons filing jointly for taxable years 2019 through 2025. Under current law, the standard deduction is $3,000 for single individuals and $6,000 for married couples filing jointly.

The bill provides for a refund, not to exceed a taxpayer's tax liability of up to $110 for individuals and $220 for married persons filing a joint return. The refund will be issued in October 2019 and will be available only for a taxpayer filing a final return by July 2019. The refunds will be reduced and prorated if the additional revenues generated by the TCJA are insufficient to fully fund the refunds.

The bill establishes the Taxpayer Relief Fund (the Fund). For fiscal years 2019 through 2025, any additional revenues attributable to the TCJA, beyond those necessary to fund the provisions of the bill, would accrue to the Fund. The bill directs the General Assembly to appropriate money from the Fund to enact permanent or temporary tax reform measures.

The bill contains an emergency clause and is identical to SB 1372.

SUMMARY AS PASSED HOUSE:

Individual income tax; itemization; standard deduction. Deconforms the Commonwealth's tax code from the provisions of the federal Tax Cuts and Jobs Act (TCJA) that limit the deduction for state and local taxes. The bill establishes an income tax subtraction starting in taxable year 2018 for Global Intangible Low-Taxed Income (GILTI).

The bill allows an individual taxpayer to itemize for state income tax purposes regardless of whether he itemizes on his federal return for taxable years 2019 through 2025. Current law requires a taxpayer to claim the standard deduction on his state return if he claims the standard deduction on his federal return.

The bill increases the standard deduction to $4,000 for single individuals and $8,000 for married persons filing jointly for taxable years 2019 through 2025. Under current law, the standard deduction is $3,000 for single individuals and $6,000 for married couples filing jointly.

SUMMARY AS INTRODUCED:

Individual income tax; itemization; standard deduction. Deconforms the Commonwealth's tax code from the provisions of the federal Tax Cuts and Jobs Act (TCJA) that limit the deduction for state and local taxes and reduce the limits for the mortgage interest deduction.

The bill allows an individual taxpayer to itemize for state income tax purposes regardless of whether he itemizes on his federal return for taxable years 2019 through 2025. Current law requires a taxpayer to claim the standard deduction on his state return if he claims the standard deduction on his federal return.

The bill increases the standard deduction to $4,000 for single individuals and $8,000 for married persons filing jointly for taxable years 2019 through 2025. Under current law, the standard deduction is $3,000 for single individuals and $6,000 for married couples filing jointly.

The bill provides that any additional revenues generated by the TCJA, beyond those revenues necessary to offset the reduction in revenues resulting from the provisions of the bill, shall be transferred to the Tax Policy Fund, created by the bill, to be used to provide tax reform to Virginia taxpayers starting in fiscal year 2020.