Finance subcommittee advances range of tax bills, most notably expansion of Virginia housing tax credit

The House Finance Subcommittee on Tuesday advanced a slate of tax measures affecting housing, aviation maintenance, business pass-throughs and state tax administration.

The most consequential measure, House Bill 17‑01, would extend the Housing Opportunity Tax Credit through Jan. 1, 2031, raise the program's annual cap from $60 million to $250 million and adjust a rural set‑aside definition. The subcommittee voted 6‑0 to report the bill and refer it to Appropriations.

The bill's patron, identified in the hearing as Delegate Bulova, told the committee the state program has been oversubscribed and, if expanded as proposed, could support an estimated 12,500 additional affordable housing units. Demis Boudreau of Virginia Housing, which administers the program, told the committee both federal and state credits carry a 30‑year compliance period that survives property transfers. "Even if that property is transferred, that compliance remains," Boudreau said.

The panel also amended and advanced House Bill 17‑29, which would make permanent a sales and use tax exemption for parts, engines and supplies used to maintain or repair aircraft at Virginia FAA‑certified maintenance facilities. Business representatives said the exemption keeps Virginia competitive with neighboring states and attracts maintenance work. After debate about the measure's previous 2,400‑pound gross takeoff weight screening, the committee adopted a substitute to retain the current weight‑limit language and add a three‑year extension to provide certainty; the bill as amended passed 8‑0.

Delegate Delaney, who carried the aircraft bill, said uncertainty about the exemption's future would affect company decisions to locate or expand. Craig Witt and Matt Oakey of the Virginia Aviation Business Association and industry supporters described a large share of regional maintenance work as nomadic and easily redirected to neighboring states without the exemption.

On business taxation, House Bill 19‑97, the pass‑through entity (PTET) tax measure that lets certain businesses pay Virginia tax at the entity level to mitigate the federal SALT cap, was reported 5‑2 following debate over federal tax changes expected in 2025. Delegate McNamara, the bill's patron, said the measure returns roughly $250 million into Virginia households annually at no cost to the state by preserving federal itemization benefits for owners of pass‑through entities. Emily Walker of the Virginia Society of CPAs told the committee the federal SALT cap is likely to persist in some form.

On tax administration, the subcommittee advanced two measures: House Bill 26‑43, which raises the threshold for underpayment penalties on estimated quarterly payments (the bill aligns Virginia with the federal $1,000 threshold), reported 7‑0; and House Bill 22‑64, to reestablish a Virginia Direct File option and to join the IRS Direct File program if available federally, which the committee reported as amended 4‑3. Supporters said a state direct‑file option would lower filing costs and help taxpayers claim credits; opponents warned of potential software and customer‑service costs tied to a direct‑file rollout.

The subcommittee also moved to adopt a currently not collectible (CNC) or hardship status for certain individual taxpayers (House Bill 2,549). As amended in committee to apply only to individual taxpayers, that measure was reported 5‑3. Sponsors described the measure as a temporary pause for truly destitute taxpayers that would not waive interest or penalties; the bill requires taxpayers to reapply for CNC status periodically.

Separately, the panel advanced or otherwise disposed of additional bills: a substitute to study taxing higher‑priced cigars (House Bill 15‑72 as amended) was adopted and reported 7‑0; a bill to expand the existing $300 firearm safety device tax credit so purchases from non‑federally licensed sellers are equally eligible was reported with substitute 7‑0 (the substitute incorporated House Bill 15‑81); a bill to extend the sales‑tax exemption for coins and bullion was laid on the table to be handled in the omnibus; and a bill to restore pre‑2015 funding levels for the land preservation tax credit was laid on the table 4‑3 after concerns about program design and oversight.

The committee unanimously reported House Bill 26‑53, which would add a sunset to the angel investor (qualified equity) tax credit following a 2022 JLARC recommendation that the credit be eliminated because of limited demonstrated effectiveness; the bill passed 8‑0.

Votes at a glance - HB 17‑01 (Housing Opportunity Tax Credit): report and refer to Appropriations, 6‑0. - HB 17‑29 (Aircraft parts sales/use tax exemption) as amended (retain 2,400‑lb limit and add 3‑yr sunset): reported as amended, 8‑0. - HB 19‑97 (Pass‑through entity tax/PTET): reported, 5‑2. - HB 26‑43 (Estimated payments threshold to $1,000): reported, 7‑0. - HB 21‑14 (7‑year statute of limitations while on installment plan): reported, 4‑3. - HB 15‑72 (Cigar data study; substitute redefining the sample): reported with substitute, 7‑0. - HB 22‑64 (Virginia Direct File / join IRS Direct File): reported as amended, 4‑3. - HB (firearm safety device credit, incorporating HB 15‑81): reported with substitute, 7‑0 (bill identifier not specified in transcript). - HB 25‑49 / HB 26‑? various housekeeping incorporations (listed in session): motions to incorporate were made on the record; details referenced by patrons. - HB 23‑36 (Land preservation tax credit restoration): motion to lay on table, 4‑3. - HB 26‑53 (Angel investor/qualified equity credit sunset): reported, 8‑0. - HB 25‑49 (Currently not collectible / CNC status for individuals, substitute to apply only to individuals): reported as amended, 5‑3.

Why it matters: The measures combine immediate tax relief and economic development tools with changes in tax administration that could affect how Virginians file and pay taxes. The housing credit proposal, if enacted as presented, would be the largest expansion of a state housing tax credit in recent sessions and is likely to shape affordable‑housing development plans across the Commonwealth.

What happens next: Several bills were referred to Appropriations or to the omnibus process for broader consideration. Measures with narrow, technical or sunset changes will advance along the House process; bills placed in the omnibus or tabled will be considered during follow‑up committee work or in the joint subcommittee on tax preferences.