New Virginia Tax Laws

The 2026 session of the General Assembly enacted several new state tax laws. Some highlights include:

Additional 1% Local Sales Tax Option  

If approved in a referendum within the locality, localities may increase their sales tax rate by 1%. The funds must be used for school construction or renovation. Certain localities can also use the funds for public transportation. The increase does not apply to food purchased for home consumption or essential personal hygiene products, which will still be taxed at the reduced rate of 1% statewide.  

Reinstatement of the Eligible Educator Expense Deduction

Qualified taxpayers can deduct up to $500 in eligible educator expenses starting with Tax Year 2026 returns.  

Retail Tobacco Products Licensing  

Retail tobacco products licensing, including for liquid nicotine and nicotine vape products, will be administered by the Virginia Alcoholic Beverage Control Authority (Virginia ABC) beginning on October 1, 2026.  

Innocent Spouse Relief

If you believe your spouse or former spouse should be held responsible for all or part of a tax due to us from a joint tax return you filed together, effective July 1 you may apply for relief from the tax liability using our Offer in Compromise Doubtful Liability process. You’ll need to meet the qualifications for relief under federal tax law.  

Standard Deduction

The standard deduction remains at $8,750 for single filers and $17,500 for married couples filing jointly for Tax Year 2026. Beginning with Tax Year 2027, the deduction increases.

For additional information and a complete list of state and local tax laws passed this year, please see the 2026 Legislative Summary.