A liberal think tank estimates that more than a million Virginia taxpayers won’t receive tax refund checks lawmakers approved as part of a major tax policy change earlier this year.
Most of those will be lower-income Virginians, according to a new analysis by The Commonwealth Institute, a Richmond policy nonprofit.
“Although this group of taxpayers does not owe state income taxes after they apply their deductions and credits, they pay a large share of their income toward other state and local taxes – particularly sales and excise taxes,” the report says. “Households with annual income under $22,000 pay, on average, 9.6% of their income in state and local taxes, while households that have annual incomes of $587,000 and above pay only 7% of their income in state and local taxes.”
The General Assembly agreed on a bipartisan plan earlier this year to deal with federal tax law changes. The debate was over how to handle an expected windfall from taxpayers who would have to file their taxes differently to take advantage of a new higher federal standard deduction while Virginia’s remained unchanged.
Lawmakers agreed to spend some of that money and give some back through refunds that should be mailed to recipients by mid-October. Single filers would get $110 and couples would get $220 back from the state.
But, The Commonwealth Institute noted, “many taxpayers will not receive checks because their state income tax liability is already offset by existing deductions, credits, or other provisions.”