Bill review: Virginia HB979 Income Tax Reform (VA)

[DTrim99]

Bill Review: Virginia HB979 Income Tax Reform

Reform ID: va-hb979 | State: VA
Bill text: https://lis.virginia.gov/bill-details/20261/HB979
Description: Virginia HB979 proposes comprehensive income tax reform effective January 1, 2027. The bill increases standard deductions (single: $3k to $10k, joint: $6k to $20k) and adds new tax brackets for high earners (8% on income $600k-$1M, 10% on income over $1M).

Merging this PR will publish the bill to the dashboard.

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What we model

Provision	Current	Proposed
Standard Deduction (Single)	$3,000	$10,000
Standard Deduction (Joint)	$6,000	$20,000
Standard Deduction (HOH)	$3,000	$15,000
Standard Deduction (Separate)	$3,000	$10,000
Standard Deduction (Surviving Spouse)	$3,000	$10,000
Tax Rate ($600k-$1M)	5.75%	8%
Tax Rate (>$1M)	5.75%	10%

Fiscal estimates (external)

• New 8% bracket on $600k-$1M income
• New 10% bracket on $1M+ income
• Standard deduction increases: ~3x current values
• Effective tax year 2027

Key results

Metric	Value
Revenue impact	+$3,061,999,641 (net tax increase)
Poverty rate	19.61% → 19.28% (-1.67%)
Child poverty rate	17.30% → 16.97% (-1.94%)
Winners	68.2%
No change	24.6%
Losers	7.2%

Note: This bill raises revenue overall because the new high-earner brackets (8% and 10%) more than offset the standard deduction increases.

Decile impact

Decile	Relative Change	Avg Benefit
1	+0.57%	$116
2	+0.73%	$337
3	+0.73%	$462
4	+0.66%	$510
5	+0.60%	$558
6	+0.51%	$567
7	+0.47%	$624
8	+0.42%	$659
9	+0.34%	$718
10	-2.60%	-$19,230

Note: Decile 10 (highest earners) pays significantly more due to the new 8% and 10% brackets. 19.9% of decile 10 households lose more than 5% of income.

District impacts

District	Avg Benefit	Winners	Losers	Poverty Change
VA-1	-$699	67%	7%	-2.00%
VA-2	-$503	69%	6%	-2.16%
VA-3	-$324	71%	5%	-2.93%
VA-4	-$527	72%	7%	-1.97%
VA-5	-$546	69%	6%	-0.65%
VA-6	-$545	68%	7%	-0.64%
VA-7	-$860	69%	7%	-1.17%
VA-8	-$2,433	69%	9%	-1.73%
VA-9	-$168	65%	5%	-0.38%
VA-10	-$2,449	69%	9%	-2.55%
VA-11	-$2,319	70%	9%	-1.35%

Note: Districts 8, 10, and 11 (Northern Virginia) have negative average benefits because high-earner tax increases outweigh standard deduction benefits in aggregate. Most households still benefit, but wealthy households in these districts pay significantly more.

Data quality notes

• Uses PolicyEngine's Enhanced CPS microdata for Virginia, projected to tax year 2027
• High-earner bracket impacts may be underestimated due to CPS top-coding
• The new brackets use a contrib parameter (gov.contrib.states.va.hb979.in_effect) to enable the reform

Reform parameters JSON

{
  "gov.contrib.states.va.hb979.in_effect": {"2027-01-01.2100-12-31": true},
  "gov.states.va.tax.income.deductions.standard.SINGLE": {"2027-01-01.2100-12-31": 10000},
  "gov.states.va.tax.income.deductions.standard.JOINT": {"2027-01-01.2100-12-31": 20000},
  "gov.states.va.tax.income.deductions.standard.HEAD_OF_HOUSEHOLD": {"2027-01-01.2100-12-31": 15000},
  "gov.states.va.tax.income.deductions.standard.SEPARATE": {"2027-01-01.2100-12-31": 10000},
  "gov.states.va.tax.income.deductions.standard.SURVIVING_SPOUSE": {"2027-01-01.2100-12-31": 10000}
}

Versions

• PolicyEngine US: 1.554.0
• Dataset: policyengine-us-data v1.48.0
• Computed: 2026-02-09

[PavelMakarchuk]

Will revisit with better data quality