Governor Youngkin floats proposal to exempt service tips from Virginia’s income tax

Newly-filed legislation is not the only way that proposals to Virginia government policy are made at the end of a calendar year. Governor Glenn Youngkin has begun releasing several proposals including last week’s announcement related to funding for local and regional jails.

On December 16, Youngkin announced a budget proposal that would exempt tips received by service professionals from Virginia’s income tax, a move that he said is estimate to return $70 million to individuals and families.

“By removing tips from taxable income, it will directly increase the take-home pay of hundreds of thousands of Virginians and give them more buying power, which in turn will improve financial stability, stimulate local economies, and honor the value of their hard work,” Youngkin said at an announcement today.

According to the Virginia Department of Taxation and the Virginia Employment Commission, more than a quarter million people in the Commonwealth are either in the food service industry, the hospitality industry, or personal care services.

The income would still have to be reported to the Internal Revenue Service but those who earn tips would be able to earn a deduction.

According to the Legislative Information System, Virginia’s Governor prepares the budget in the form of a bill that goes through both chambers of the General Assembly.

“Each bill is passed by their house of origin and communicated to the other body,” reads the Frequently Asked Questions section. “The Senate will refer the House bill to the Senate Finance & Appropriations Committee, then report it out of committee with amendments.”

Do take a look at the FAQ for more on how the state budgeting process works in Virginia. For more on the story, also take a look at Charlotte Rene Woods’ article in the Virginia Mercury.

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