Lawmakers Approve Income Tax Subtraction Increase for National Guard

by Madison Hirneisen


Virginia could soon increase the income tax subtraction for certain members of the National Guard under a proposal passed by lawmakers in the Virginia General Assembly this week.

The proposal, contained in HB 2373, would increase from $3,000 to $5,500 the income tax subtraction for certain members of the Virginia National Guard. The income tax subtraction would apply starting in the 2023 taxable year, and would be eligible to O-6 and below – a rank designation that is a Colonel in the Army, Air Force and Marines, and Captain in the Navy.

The proposal is contained in two now-identical bills – one originated in the House, and the other in the Senate. Lawmakers came together to compromise on differences between the measures, which mainly came down to the specified amount of the income tax subtraction. The House version of the bill proposed a $5,000 subtraction, while the Senate bill proposed a $6,000 subtraction.

Both the House and Senate passed the conference committee version of HB 2373 in unanimous floor votes this week. The chambers are likely to vote on the identical Senate version, contained in SB 1210, in the coming days.

Under current law, Virginia National Guard Members of O-3 rank or below are allowed an income tax subtraction of up to $3,000. Proponents of the measure contended an increase of Virginia’s income tax subtraction for National Guard members would help Virginia stay “competitive” with other neighboring states.

“We know that Virginia’s workforce constantly competes with neighboring states to retain National Guard members as they remain in the reserves,” Del. Scott Wyatt, R-Hanover, the author of the House version of the proposal, said in a subcommittee last month.

If the bill is signed into law, it will be the first time in more than two decades the subtraction amount will be adjusted, according to Wyatt.

Both the Senate and House version of the proposal received bipartisan support as they wove through the General Assembly.

While a fiscal analysis was not completed for the income tax subtraction of $5,500, the Department of Taxation estimated the income tax subtraction of $5,000 in the House bill would impact General Fund revenue by $675,000 in fiscal year 2024, and $450,000 in every fiscal year thereafter. The department estimated the Senate’s proposed $6,000 income tax subtraction would impact General Fund revenue by $973,500 in fiscal year 2024 and $649,000 every year after that.

After passing the General Assembly, the bills will head to Gov. Glenn Youngkin’s desk for consideration. The governor’s spokesperson, Macaulay Porter, did not specify in an email whether or not the governor had taken a position on the bill, but said Youngkin “will review the legislation when it comes to his desk.”

The governor’s administration has shown support this session for another proposal that would remove the existing age restriction on the income tax subtraction for military benefits. Youngkin’s proposed budget amendments introduced in December, included funding to remove this age restriction.

One such bill that would do so passed unanimously out of the House before it was swiftly defeated in the Senate Committee on Finance and Appropriations earlier this month.

Though that bill and similar proposals did not advance in the General Assembly this session, there is still a chance lawmakers could potentially work out an agreement to include funding to remove the age limit in the amended budget plan.

The House’s proposed amendments to the two-year budget include funding to remove the age limit, while the Senate’s does not include this proposed funding.

A committee of lawmakers are still hammering out compromises on the proposed budget amendments behind closed doors as the session nears a close. The General Assembly is set to adjourn Saturday, though a special session could be called to give lawmakers more time to hammer out details if no budget deal is reached.

 – – –

Madison Hirneisen is a staff reporter covering Virginia and Maryland for The Center Square. Madison previously covered California for The Center Square out of Los Angeles, but recently relocated to the DC area. Her reporting has appeared in several community newspapers and The Washington Times.
Photo “National Guard” by National Guard.


Related posts