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Overview VA SIT update
Governor Ralph Northam signed House Bill 2529 (H.B. 2529)1 and Senate Bill 1372 (S.B. 1372) (collectively, the Bills) which include the following modifications to Virginia law:
Updates Virginia’s tax law to the Internal Revenue Code (IRC) as of December 31, 2018.
- Provides a corporate income tax subtraction for Global Intangible Low-Taxed Income (GILTI) included in federal taxable income under the provisions of the federal Tax Cuts and Jobs Act. Subtraction for GILTI
The Bills provide a corporate income tax subtraction for any GILTI included in federal taxable income by the operation of IRC § 951A as enacted by the Act, for taxable years beginning on and after January 1, 2018. No subtraction is provided for individual taxpayers. The Bills do not address the deductions allowed under IRC § 250 under that Act, but by updating conformity to the IRC as of December 31, 2018, presumably such deductions are allowed in determining Virginia’s starting point.
- Provides a corporate and individual subtraction equal to 20 percent of business interest disallowed pursuant to § 163(j) of the IRC. The Act amended IRC § 163(j) to provide a deferral of certain business interest. The Bills conform to the provisions of IRC § 163(j) as amended by the Act but provides a Virginia subtraction for individuals and corporations equal to 20 percent of business interest disallowed in determining federal taxable income in taxable years beginning on or after January 1, 2018. The Bills do not address business interest deferred under IRC § 163(j) and deducted in subsequent years.
- Increases the standard deduction for individuals for taxable years beginning on and after January 1, 2019, but before January 1, 2026, to $4,500 for single individuals and $9,000 for married persons ($4,500 case of a married individual filing a separate return).
- Decouples from the overall limitation on itemized deductions for individuals under the provisions of the federal Tax Cuts and Jobs Act for taxable years beginning on and after January 1, 2019.
- Provides an individual income tax subtraction for the actual amount of real and personal property taxes not otherwise deducted solely on account of the dollar limitation imposed on individual deductions by § 164(b)(6)(B) of the IRC for taxable years beginning on and after January 1, 2019.
- Provides a one-time special refund for individual income taxpayers equal to $110 for an individual, or $220 for married persons filing a joint return for 2018.
- Creates a special fund for revenue raised by individual tax reform provisions dedicated to future tax reform provisions.
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