Virginia’s highest tax bracket starts at $17K. Some say it’s time for an update

Report shows how “bracket creep” raised taxes on lower-income people.
Report shows how “bracket creep” raised taxes on lower-income people.(Virginia Mercury)
Published: Nov. 4, 2022 at 7:53 AM EDT
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Under Virginia’s state income tax system, the highest tax bracket starts at just $17,000, a number that hasn’t changed since 1990.

Because the brackets stayed the same as incomes rose over three decades of inflation, more and more of the money Virginians make is now taxed at the highest rate of 5.75%, according to a new state report.  Since 1990, the report found, the state’s median income rose 108%. Over the same period, taxes owed by single filers making the median income went up 173%.

“Tax experts refer to this dynamic as ‘bracket creep,’” the state’s Joint Legislative Audit andReview Commission wrote in the report on how Virginia could make its tax system fairer. “Incomes rise over time, but income tax brackets do not.”

Bracket creep hits low- and middle-income filers the hardest, the report says, because people at the lower end would pay less if Virginia adjusted its tax brackets for inflation, as the federal government and many other states do.

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NBC12 is a partner with The Virginia Mercury, an independent, nonprofit online news...
NBC12 is a partner with The Virginia Mercury, an independent, nonprofit online news organization covering state government and policy.(Virginia Mercury)