Glenn Youngkin by Gage Skidmore is licensed under CC BY-SA 2.0
On Wednesday December 17th, Governor Glenn Youngkin proposed his final state budget for Virginia’s 2026-2028 fiscal years. He spoke to members of the Joint Money Committees, which included governor-elect Spanberger. In his address, Youngkin reflected over the record growth of Virginia’s economy over the last four years and clearly remarked, “There is no need for any new taxes, and there is no need for tax increases.” He framed his budget as a way to continue this growth, while at the same time acting as a bridge to Spanberger’s administration.
The proposed budget seeks to make the tax cuts Youngkin passed during his tenure permanent. This includes the higher standard deduction for individuals and joint filers, $8,750 and $17,500 respectively. If not acted upon this will sunset 2027 and return to the lower levels of $3,000 and $6,000, respectively. Another policy Youngkin hopes to make permanent is Virgina’s expanded earned income tax credit (EITC), which has mainly benefited lower-income workers. This would also sunset 2027, and Virginians would no longer be able to claim refundable credit.
The proposed budget adjusts Virgina’s tax policy to partially align with the changes made to the federal code by the Big Beautiful Bill last summer. This includes a state tax deduction on tips, overtime pay, and interest payments on car loans. Taxpayers who qualify for these new federal deductions can deduct a portion of that amount from their state taxable income. Starting with 25% in 2026, then 50% in the following years.
This partial adjustment strategy is meant to be a comprise for critiques who would argue that these changes, if made permanent, would significantly reduce Virgina’s budget. This argument is hard to make given the economic boom Youngkin’s policies have helped usher in. Virgina’s operating budget has grown significantly during his tenure, from $90 billion in 2022 to an estimated $97 billion in 2026. Youngkin’s tax changes have saved Virginian taxpayers an estimated $6 billion, with an additional $3 billion in tax rebates. Making his tax rules permanent would save an estimated $7.5 billion over the next four years.
With only weeks left in his term, Youngkin is still fighting for Virginians. Hopefully the new administration can agree to continue the policies that have benefited their constituents these past four years and continue the record setting growth of the Commonwealth of Virginia.