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Delegate Watts presents comprehensive tax-reform package to expand standard deduction, end grocery tax and raise top rates
Summary
Delegate Delia Watts told Subcommittee 3 that HB 979 would raise the standard deduction (to $12,000/$24,000), establish a head-of-household deduction, make the EITC permanently refundable, eliminate the grocery/personal-hygiene local tax and create higher top brackets to fund the package; the committee adopted a substitute as amended and voted to carry the bill over to 2027 for further work.
Delegate Delia Watts introduced HB 979 as a comprehensive tax-reform package intended to deliver permanent tax relief to most Virginians while raising new revenue from the highest earners. "Tax cuts do make a difference in real lives," Watts said, urging the committee to consider a package that would raise the standard deduction, create a head-of-household deduction, make the earned-income tax credit permanently refundable and end remaining taxes on groceries and essential personal-hygiene items.
Watts described the package in concrete terms: a roughly $700 million set of standard-deduction increases (she cited raising the standard deduction to $12,000 for singles and $24,000 for joint filers), a $410 million package of family tax cuts that includes an estimated $115 million to create a head-of-household standard deduction and a $400 per-child provision for children under 6 for filers under $100,000, and $200 million to make the earned-income tax credit permanently refundable. She also described a $330 million estimate to end the grocery and essential-hygiene tax and a $10 million housing-opportunity tax-credit allocation.
To fund ongoing costs, Watts proposed higher top marginal rates, taxing income over $600,000 at 8% and income beyond $1,000,000 at 10%; she said that change would raise approximately $2.4 billion and allow the other cuts to be permanent. Watts also presented charts she said map how returning 1% of state income-tax revenue to the localities where it was raised could reduce local property-tax pressure.
Committee members questioned and praised specific elements. Delegate McNamara said she "loves a lot of this proposal," endorsing the standard-deduction increases and grocery tax repeal. A number of advocacy groups testified in favor: Megan Davis of the Commonwealth Institute, Lisonbee Gilbert of Voices for Virginia's Children, Ryan O'Toole of Freedom Virginia and others cited affordability and support for the bill's refundable credits and child provisions. Consumer and health-product stakeholders also testified remotely in support of related exemptions for medical necessities.
On procedure, the committee considered a substitute and accepted line amendments recommended by counsel to restore certain current-law language and add a delayed effective date provision (expected 2027). The committee adopted the "substitute as amended," then voted by voice to carry the bill over to the 2027 session for further work.
The package remains a work in progress: Watts told the committee she expects additional amendments and follow-up analysis with tax department staff and legislative services on fiscal estimates before final adoption.
