House and Senate Republicans announced this morning that they’ve come to an agreement on tax cuts--one that comes endorsed by Democratic Governor Ralph Northam. Their plan calls for increasing the standard deduction by 50 percent in 2020.
Federal tax code changes will leave Virginia with an estimated $1.2 billion surplus. Republicans in the General Assembly agreed that this cash should be sent back to taxpayers, but the two chambers disagreed about how to do it.
Their compromise sticks closer to the Senate Republican tax plan. It increases the standard deduction for the first time since the 1980s; a married couple could deduct $9,000 instead of the current $6,000 starting in 2020. That same couple would get a one-time tax refund of $220 in October -- just one month before the crucial November elections.
The plan will get a floor vote in both chambers in a floor vote on Monday, and would likely pass in a standard floor vote. But in order for the bill to take effect before July 1, Republicans will need substantial Democratic support. Democratic lawmakers have largely voted opposed the Republican tax plans so far this year, saying they do little to help lower-income taxpayers who got the least relief from Trump's tax overhaul.
Northam, who is facing calls to step down from all corners of his party, said in a statement today that he backed the plan, marking a notable reversal from his original budget amendment. That proposal called for putting most of the surplus in reserves, with some spending set aside for short-term initiatives like rural broadband and environmental programs.
"I am pleased we have reached an agreement on tax policy that is equitable for all Virginians and allows them to keep more of their paychecks,” Northam said.
Lawmakers privately say they're eager to get out of Richmond after a bruising week of media attention. This year's abbreviated General Assembly session ends February 23.