Taking up tax conformity, policy together could make refunds difficult for Virginians

Taking up tax conformity, policy together could make refunds difficult for Virginians
The General Assembly session begins this week in Richmond. (Source: Ned Oliver/Virginia Mercury)

If Virginia lawmakers can’t decide what to do about federal tax changes and an estimated $594 million more coming to the state because of some of those changes, correct state tax refunds could take some time to make it back to taxpayers, Virginia Mercury reports.

Typically those two decisions — tax conformity and tax policy — are handled separately and cause no delays in the state refund process. But there’s already disagreement on the tax policy around expected revenue increases that will come from federal tax changes, and the legislature has to pass conformity with a super-majority for conformity to take immediate effect.

“We must align policy discussion with any discussions on conformity,” said Speaker of the House Kirk Cox, R-Colonial Heights, on Friday. “They just go hand-in-hand.”

Congress doubled the standard deduction as part of President Donald Trump’s tax plan so taxpayers don’t have to itemize their federal taxes to get more money back. Virginia didn’t change its standard deduction, so it could still be useful for some to itemize their state taxes for costs like mortgage-interest payments.

But Virginia law doesn’t allow taxpayers to take the standard deduction on the federal level and then itemize their state taxes.

The same situation has existed for people in lower income brackets because Virginia’s standard deduction hasn’t matched the federal deduction. Before now, people who could itemize between $6,000 and $12,000 worth of items every year had to choose to take the standard deduction or leave money on the table.

The Virginia Mercury is a new, nonpartisan, nonprofit news organization covering Virginia government and policy.