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2019 SESSION

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SB 1372 Income tax, state; conformity of taxation system with the IRC, taxable income deductions, etc.

Introduced by: Thomas K. Norment, Jr. | 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 HB 2529.

SUMMARY AS PASSED SENATE:

Virginia income tax; conformity of the Commonwealth's taxation system with the Internal Revenue Code. Advances conformity of the Commonwealth's tax code with the federal tax code to December 31, 2018. The provides for a refund, in addition to any refund for the overpayment of taxes, of up to $110 for individuals, and $220 for married persons filing a joint return, for those whole filed tax returns by July 1, 2019.  The refund would be issued in October, 2019. Any additional revenues generated by federal tax change beyond that necessary to issue the refunds will be deposited into a nonreverting fund to be used for future tax reform items. For taxable years beginning on and after January 1, 2018, the bill would extend the existing corporate income tax subtraction for foreign income to apply to the amount of Global Intangible Low-Taxed Income that is included in a corporation's federal taxable income, and would create an individual and corporate income tax subtraction for one-fifth of the amount of business interest that is disallowed as a deduction from federal income tax.  For taxable years beginning on and after January 1, 2019, the bill deconforms from the provision of the federal Tax Cuts and Jobs Act that limits the deduction for state and local taxes, up to $10,000.  For taxable years beginning on an after January 1, 2019, but before January 1, 2026, the standard deduction will increase to $4,500 for individuals and $9,000 for married persons filing jointly.

The bill incorporates SB 1237, SB 1320, SB 1443, SB 1631, SB 1531, SB 1657, and SB 1739.

SUMMARY AS INTRODUCED:

Conformity of the Commonwealth's taxation system with the Internal Revenue Code; emergency. Advances conformity of the Commonwealth's tax code with the federal tax code to December 31, 2018, including conformity to the federal Tax Cuts and Jobs Act. The bill also eliminates an obsolete provision and contains an emergency clause.