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VA Gov. Youngkin Proposes First-of-Its-Kind Small Business Tax Break

VA Gov. Youngkin Proposes First-of-Its-Kind Small Business Tax Break

Virginia Governor Glenn Youngkin has proposed a first-of-its-kind tax break for small business owners in the state. 

A report from Norfolk’s WAVY 10 news station shared details, noting that Youngkin intends to provide a 10% deduction for business income. He referred to this as “a direct savings that small businesses will see right away.”

In a speech earlier this month, the Republican Governor said, “My fundamental belief is that money is better spent by the businesses, and the business owners, than by the government.”

Credit: Anna Moneymaker/Getty Images

Virginia Chamber Foundation Executive Director Keith Martin told WAVY 10 that approximately 95% of companies in The Old Dominion State are small businesses with 15 or fewer employees. This means that the new tax break will have a far-reaching impact on thousands of families who own and operate small businesses.

Delegate Joe McNamara (R-Roanoke), who is himself a small business owner, said of Youngkin’s plan, “I can’t find another state that appears to have this. So I think it is really exciting.”

McNamara went on to explain the tax relief proposal in empirical terms, saying, “So if you have a small business and you pay yourself a salary and still have some money left after paying all of your bills, let’s say you make $50,000, for that single person, pass-through business it would be about $280 worth of tax savings.”

He continued, “So not a tremendous amount of dollars, but certainly something that is very well needed and is going to be very much appreciated by businesses that are struggling.”

Credit: Sky Noir Photography by Bill Dickinson/Getty Images

The eligibility criteria for the proposed tax break are expected to be similar to those needed to qualify for the federal Qualified Business Income tax deduction that was included in former President Donald Trump’s 2017 Tax Cuts and Jobs Act.

In addition to his small business tax credit proposal, Youngkin is pushing for Virginia’s corporate tax rate to be lowered from 6% to 5%.

In total, the Governor’s proposal would offer over $1 billion in tax relief.

The plan has not yet been officially approved but is expected to take effect in 2023 if it passes. Youngkin’s plan faces criticism from Democratic members of Virginia’s Congress, including Senate Democratic Caucus Chair Mamie Locke.

Credit: Bruce Yuanyue Bi/Getty Images

Locke dissented, saying, “Instead of fully funding mental health services, public education institutions, addressing the workforce shortage, and making housing and higher education more affordable, the Governor is proposing a budget that gives major corporations and the top 1% massive tax cuts at the expense of those who need it most.”

What do you think about Governor Youngkin’s tax relief proposal?

Featured Image Credit: Sarah Silbiger/Getty Images

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Frank Jenkins Jr

Frank Jenkins Jr

Frank Jenkins Jr. is the managing partner of Adams, Jenkins & Cheatham, a CPA practice based in Midlothian, VA. Frank specializes in Consulting services, tax planning, accounting, audit & assurances. "I genuinely care about our clients because I have a personal connection with them. This job requires me to multi-task and work under tight deadlines. I get great professional satisfaction from balancing firm and client commitments while building a strong team here at AJC."

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