Virginia enacts new refundable tax credit for individuals without Social Security numbers

Virginia lawmakers have introduced a significant piece of legislation, VA HB621, aimed at expanding tax credits for low-income families, particularly those affected by immigration status. Introduced on November 18, 2024, the bill seeks to provide a refundable tax credit for individuals and married couples who qualify for the federal Earned Income Tax Credit (EITC) but lack a valid Social Security number.

The primary provision of VA HB621 allows eligible individuals to claim a refundable credit equal to 20% of their federal EITC on their Virginia income tax return. This change is designed to support families who, despite meeting income requirements, have been excluded from federal tax benefits due to their immigration status. The bill also establishes a process for these individuals to claim the credit, ensuring that they can access the financial support intended for low-income earners.

Debate surrounding the bill has highlighted concerns about its potential impact on state revenue and the implications of extending tax benefits to undocumented individuals. Proponents argue that the measure is a necessary step toward equity, allowing all working families to benefit from tax relief, while opponents caution that it could strain Virginia's budget and set a precedent for similar legislation.

The economic implications of VA HB621 could be substantial. By providing financial relief to low-income families, the bill aims to stimulate local economies through increased consumer spending. Additionally, it addresses social equity by acknowledging the contributions of all workers, regardless of their immigration status.

As the legislative process unfolds, experts suggest that the bill's passage could pave the way for broader discussions on tax reform and immigration policy in Virginia. If enacted, VA HB621 could significantly alter the landscape of tax benefits in the state, providing much-needed support to families who have historically been marginalized in the tax system. The next steps will involve committee reviews and potential amendments as lawmakers weigh the bill's benefits against its fiscal responsibilities.