Baccalaureate public institutions of higher education; Richard Bland College; boards of visitors; membership; student representative. Increases by one the membership of the board of visitors of Richard Bland College and of each baccalaureate public institution of higher education in the Commonwealth. The bill requires at least one voting member of each such board of visitors to be a representative of the student body of the institution. The bill requires, in the case of any vacancy of the student representative on the board of visitors of Richard Bland College or any baccalaureate public institution of higher education, the student body of the relevant institution to submit to the Governor a list of three nominees from which the Governor is required to appoint a member to fill the vacancy. Current law permits the board of visitors of each baccalaureate public institution of higher education to appoint one or more nonvoting, advisory student representatives to the board.
Retail sales and use tax; commercial and industrial exemptions; data centers. Limits, beginning July 1, 2026, the retail sales and use tax exemption for computer equipment or enabling software to (i) the purchase or lease of equipment or enabling software for use in a data center, provided that such purchase or lease takes place prior to the start of operations for such data center, or (ii) the purchase or lease of equipment or enabling software as part of a refresh cycle of an existing data center. The bill defines "refresh cycle" to mean purchases or leases made to replace, repair, or upgrade the equipment or enabling software that improve the energy efficiency of such equipment or software.
Taxation in the Commonwealth. Levies the retail sales and use tax on the following services: admissions; charges for recreation, fitness, or sports facilities; nonmedical personal services or counseling; dry cleaning and laundry services; companion animal care; residential home repair or maintenance, landscaping, or cleaning services when paid for directly by a resident or homeowner; vehicle and engine repair; repairs or alterations to tangible personal property; storage of tangible personal property; delivery or shipping services; travel, event, and aesthetic planning services; and digital services. Digital services are defined in the bill as the following: software application services, computer-related services, website hosting and design, data storage, and digital subscription services. The services taxed under the bill include any transaction for digital services where the purchaser or consumer of the service is a business but do not include any service otherwise exempt under law. The bill also imposes the retail sales and use tax on digital personal property, defined in the bill as a digital product delivered electronically that the purchaser owns or has the ability to continually access without having to pay an additional subscription or usage fee to the seller after paying the initial purchase price. Revenues generated by the taxes levied on services and digital personal property shall be allocated in the same manner as other sales and use taxes; however, revenues from the state portion of the sales and use tax that would be allocated to the general fund shall instead be allocated as follows: first, (i) revenue generated by the imposition of such tax on delivery services in the Northern Virginia Transportation District shall be distributed to the Washington Metropolitan Area Transit Authority and (ii) all other revenues generated by the imposition of such tax on delivery services shall be distributed to the Commonwealth Transportation Fund. Of the remaining revenues, (a) 60 percent shall be distributed to localities on the basis of school-age population and (b) 40 percent shall be distributed to localities on the basis of the high-need student population in the locality. The bill clarifies that a high-need student population includes students who are (1) automatically certified for free school meals because of participation in social services programs, (2) participants in a program of special education, or (3) English language learners. The bill provides certain exemptions to the sales and use tax on services, including health care services that must be performed by a person licensed or certified by the Department of Health Professions, veterinary services, professional services, internet access services, and services provided by a person who does not receive more than $2,500 per year in gross receipts for performance of such services. The bill exempts services purchased by a nonprofit organization and services purchased by a homeowners' association or by a landlord for the benefit of his tenant. The bill also repeals the service exemptions currently provided for the sale of custom programs and modification of prewritten programs. Finally, the bill exempts food purchased for human consumption and essential personal hygiene products from all state, local, and regional sales taxes on and after July 1, 2026. Under current law, food purchased for human consumption and essential personal hygiene products are subject only to the one percent local option sales tax.
Taxation provisions. Increases the standard deduction to $10,000 for single individuals, $15,000 for individuals eligible to claim head of household for federal tax purposes, and $20,000 for married individuals beginning in taxable year 2027 and indexes such deduction amount for inflation beginning in taxable year 2028. The bill also removes the aggregate amount of housing opportunity tax credits that may be claimed for qualified projects across all calendar years and exempts food purchased for human consumption and essential personal hygiene products from the local sales tax. The bill establishes two new tax brackets beginning on and after January 1, 2027, that tax income in excess of $600,000 but not in excess of $1,000,000 at a rate of eight percent and income in excess of $1,000,000 at a rate of 10 percent. Finally, the bill provides that 50 percent of revenues generated by the new tax brackets will be dedicated to localities for maintenance, operation, capital outlays, debt and interest payments, or other expenses incurred in the operation of public schools.
Income tax credit; affordable rental housing tax credit. Establishes a nonrefundable tax credit for taxable years 2026 through 2030 for eligible landlords equal to $750 per affordable dwelling unit, as certified by the Department of Housing and Community Development. The bill limits the (i) total amount of such credits available to an eligible landlord to $15,000 per taxable year and (ii) aggregate amount of such credits claimed to $5 million per taxable year.
Maximum number of judges on the Court of Appeals of Virginia; hearings en banc. Increases from 17 to 21 the maximum number of authorized judges on the Court of Appeals of Virginia. The bill provides that the Supreme Court of Virginia shall prescribe by rule the number of judges needed for the Court of Appeals to sit en banc, and that such number shall not be fewer than 13 judges.
Line of Duty Act; transitional coverage. Requires the Department of Human Resource Management to acquire and provide temporary transitional health insurance coverage to disabled persons, eligible spouses, and eligible dependents during the period of transition into the LODA (Line of Duty Act) Health Benefits Plans. Current law authorizes but does not require the Department to acquire and provide such temporary transitional health insurance coverage to disabled persons, eligible spouses, and eligible dependents during such period.
Boyd-Graves Conference and Virginia Criminal Justice Conference; work group to address legal deserts within the Commonwealth; report. Directs the Boyd-Graves Conference, in conjunction with the Virginia Criminal Justice Conference, to convene a work group of relevant stakeholders to make recommendations for legislative solutions to address the disparities in the geographical distribution of available legal services within the Commonwealth. The bill directs the work group to report its findings and recommendations to the Chairs of the House and Senate Committees for Courts of Justice by November 1, 2026.
Office of Regulatory Management established. Codifies the Office of Regulatory Management in the Office of the Governor. The purpose of the Office is to review all regulations and guidance documents issued by executive branch agencies prior to such regulation or document being finalized and to provide guidelines for agencies to follow when engaging in regulatory activities. Currently, the Office of Regulatory Management operates within the Office of the Governor pursuant to Executive Order 19 (2022).
Microchip and semiconductor manufacturing and supply chain tax credits; Virginia Economic Development Partnership Authority evaluation; report. Creates a series of individual and corporate income tax credits for companies engaged in the microchip and semiconductor manufacturing and supply chain business that between January 1, 2026, and December 31, 2036, (i) invest at least $400 million, (ii) create at least 100 new jobs, (iii) pay an average prevailing wage salary, and (iv) submit a plan for use of and committing $50 million of community investments. The bill creates three refundable tax credits in taxable years 2026 through 2030 in amounts equal to (a) five percent of capital investment expenditures incurred during the year, (b) six percent of child care services expenditures incurred during the year, and (c) 7.5 percent of gross wages paid for each new job created during the year.
Sales and use tax on taxable services and digital personal property; taxes levied in certain transportation districts; funding for transportation. Decreases the retail sales and use tax from 4.3 percent to four percent and expands such tax to taxable services, defined in the bill, and digital personal property, also defined in the bill, beginning on January 1, 2027. Additionally, the bill imposes (i) an additional retail sales and use tax in any county or city that is a member of the Northern Virginia Transportation Commission at the rate of 0.385 percent; any county or city that is embraced by the Northern Virginia Transportation Authority but that is not a member of the Northern Virginia Transportation Commission at the rate of 0.615 percent; and any county or city that is a member of the Potomac and Rappahannock Transportation Commission at the rate of 0.2 percent; (ii) a retail delivery fee in the amount of 20 cents upon each retail delivery, defined in the bill, made in any county or city located within the Northern Virginia Transportation District or the Potomac and Rappahannock Transportation Commission; and (iii) a regional highway use fee on all vehicles in the Commonwealth that are subject to the existing highway use fee.
Occoquan Reservoir; low-flow protections for drinking water safe yield. Requires any Virginia Pollutant Discharge Elimination System Permit issued after July 1, 2026, authorizing the diversion of sewage or reclaimed water from a publicly owned treatment works for reuse that would otherwise discharge into the Occoquan Reservoir, the Occoquan River, Bull Run, or any of their tributaries above the Occoquan Reservoir to incorporate certain low-flow protection requirements for drinking water safe yield if the total diversion amount allowed by the permit exceeds 500,000 gallons per day. The bill also prohibits the issuance of any Virginia Water Protection Permit after July 1, 2026, authorizing the withdrawal of water for consumptive uses from the Occoquan Reservoir, the Occoquan River, Bull Run, or any of their tributaries above the Occoquan Reservoir for any purpose other than agricultural or irrigation purposes or for continued operation, expansion, or relocation of existing public water supply withdrawals.
