As the 2026 General Assembly approaches the unofficial half-way marker of the session at “crossover,” several finance-related bills of interest to local governments have advanced, as outlined below.
Admissions Tax
HB 550 (Anderson) and its companion bill, SB 400 (Diggs), would allow James City County and York County the option to impose a tax on admissions for attendance at any event. When legislation was enacted in 2020 providing counties with revenue options more closely aligned with those long available to cities and towns, it included a provision barring counties where an additional state sales and use tax (of which a portion is dedicated to tourism promotion) is levied from imposing admissions taxes. All other counties were permitted to impose a tax on admissions of up to 10 percent. This legislation removes this restriction and allows these counties the same option available to all other counties. VACo supports this bill and spoke in favor during the House subcommittee hearing. Both bills have passed their chambers of origin. HB 550 was reported from Senate Finance and Appropriations this morning and is headed to the Senate floor; SB 400 has been referred to House Finance.
Personal Property Taxes
HB 960 (Watts) would change how tangible personal property employed in a trade or business is valued for purposes of personal property taxation. Under current law, this property is to be valued by means of a percentage or percentages of original cost; a 2014 Attorney General opinion held that “original cost” means the original cost paid by the original purchaser of the property from the manufacturer or dealer, and not the price paid by the current owner. HB 960 would define “original cost” to mean “original cost to the taxpayer.” VACo expressed concerns about the potential revenue impact to localities that have relied on the Attorney General’s opinion in valuing such property. To allow for further discussion of the issue, the patron added a reenactment clause on the bill, meaning that the legislation would need to be considered again by the 2027 General Assembly. This bill has passed the House and awaits consideration in the Senate Finance and Appropriations Committee.
HB 557 (Reaser) sets out electric-powered landscaping equipment employed in a trade or business as a separate class of personal property and allows localities to impose a tax rate on this equipment that is lower than the rate applied to general personal property. This legislation has passed the House and has been referred to the Senate Finance and Appropriations Committee.
Property Tax Exemptions
HB 175 (Feggans) authorizes a local governing body to provide up to a total exemption from real property taxes for property owned by the surviving spouse of a servicemember who died in the line of duty. Current law provides that such property qualifies for a full exemption if it does not exceed the average assessed value of a dwelling that is situated on property that is zoned as single family residential. If the value of the dwelling exceeds the average assessed value, the portion of the assessed value that exceeds the average assessed value is taxable. This bill has passed the House and has been referred to Senate Finance and Appropriations, which continued a similar bill (SB 8 (DeSteph)) to 2027 earlier this session.
HB 854 (Cousins) allows real or personal property owned by certain nonprofit organizations that provide affordable housing to be eligible for local-option property tax exemptions under localities’ authority to provide exemptions for property used for certain charitable or benevolent purposes. The bill allows this property to be considered under this category if it is owned by an ownership entity with a controlling interest held directly or indirectly by nonprofit organizations, even though there may be some for-profit ownership interest in the property. This bill has passed the House and awaits a hearing in Senate Finance and Appropriations.
SB 181 (Williams Graves), which has passed the Senate and has been referred to the House Finance Committee, allows a local governing body to provide for a partial tax exemption for real estate which is converted to affordable housing under certain circumstances. The partial exemption may be an amount equal to the increase in assessed value, or a percentage of the increase, but would be capped at the amount of expenses incurred in connection with the residential conversion, and would be limited to 15 years. The bill also allows localities to grant tax incentives or provide regulatory flexibility, such as a reduction in permit fees, a streamlined process for permit approval, or a reduction in gross receipts tax, to encourage qualifying residential conversions.
Tax Administration
HB 954 (Watts) addresses problems experienced by local Treasurers’ offices in making exact change for taxpayers who pay bills in cash after the United States Mint ceased production of penny coins last year. Among other provisions, the bill authorizes a local governing body to set out procedures for the adjustment of bills and account balances for taxes and other charges due to the locality, which could include rounding to the nearest five-cent increment or the write-down or write-off of sums due that are less than five cents. VACo supports this legislation, which was introduced at the request of the Treasurers’ Association of Virginia. This bill is on the House floor.
HB 915 (Lopez) authorizes a local governing body to allow an extension on personal property taxes owed by federal employees who are furloughed and essential federal employees who must work without pay during a federal government shutdown. This bill has passed the House and been referred to Senate Finance and Appropriations.
HB 1358 (Runion) and its companion, SB 649 (Obenshain), seek to improve awareness among buyers of real estate that property may be subject to use value assessment and taxation. The bills add language to the “buyer beware” statute setting out what must be included in a residential property disclosure statement that the owner provides to the buyer; under the bill, this statement must include notice that the owner makes no representations or warranties with respect to whether the property is located in a locality that has adopted a land-use plan that may provide for use value assessment and taxation for real estate. If a real estate settlement agent knows that the real estate is subject to use value assessment and taxation, the agent must provide a written notice, which would be developed by the Department of Taxation, to the purchaser. Both bills have passed their respective chambers of origin. SB 829 (Surovell), which aimed to improve awareness among homeowners about property that is designated as a resource protection area, would have required such information to be included on real property tax bills; this bill was continued to 2027 in Senate Finance and Appropriations over implementation concerns.
HB 341 (Martinez) requires any county that has imposed a disposable plastic bag tax to distribute a portion of tax revenues to any town located within the county.
Failed/Continued Bills of Interest to Local Governments
HB 13 (McNamara) and HB 703 (Tata) would have eliminated the remaining 1 percent local option sales and use tax on groceries and replaced the lost revenue with a state appropriation based on each locality’s monthly pro rata share of total sales and use tax collections. VACo spoke in opposition and registered concerns about eliminating a local revenue source and relying on the state to continue to appropriate the replacement revenue in perpetuity. Both bills were continued to 2027 in House Finance. SB 9 (Suetterlein), a similar bill, was heard in Senate Finance and Appropriations earlier in the session and also continued to 2027.
HB 563 (Reid) would have set out generating equipment purchased on and after July 1, 2026, for the purpose of upgrading the backup or standby power systems of a major energy consumer (as defined in the bill) as a separate class of personal property and allowed a locality to impose a tax rate that is lower than the rate applied to general personal property. This bill was also continued to 2027 in House Finance.
SB 712 (Stuart) would have allowed localities to impose a tax on nicotine vapor products up to a maximum rate of 10 percent of the wholesale price or $0.11 per milliliter. This bill was stricken at the request of the patron. A similar bill, HB 1449 (Pope Adams), was not taken up in House Appropriations prior to crossover.
HB 697 (Kent) would have established an income tax credit for the surviving spouse of a veteran who would have qualified for the real property tax exemption for disabled veterans but who died prior to the enactment of the exemption in 2011. The surviving spouse would be allowed to claim an income tax credit in the amount of the real estate taxes paid for the most recent assessment of the property. The credit would expire January 1, 2031, and would be capped at $5 million in aggregate per taxable year. This bill was reported from House Finance and referred to House Appropriations, but not heard in that committee prior to crossover.
HB 1136 (Cherry) would have directed the Department of Health to determine the viability of establishing a centralized office to handle licensure, permitting, and taxation for mobile food units; this study would also consider centralizing collection of meals taxes from mobile food units. The bill was tabled in House Rules, although the subject matter is expected to be referred to the Virginia Department of Health.
SB 93 (Roem) sought to address a recent issue in the City of Manassas and provided that if any tenant of a data center is a bank, then the data center operator and any tenants of the data center would not qualify for the sales tax exemption for data center computer equipment. The bill would also make the computer equipment and peripherals of all banks used in a data center subject to tangible personal property taxes. The bill was continued to 2027 in Senate Finance and Appropriations over concerns about its scope.
VACo Contact: Katie Boyle