Virginia Gov. Glenn Youngkin introduced a new budget proposal that would exempt tips from the state income tax, according to a news release. If the amendment is approved, Virginia would become the first state in the country to make tips tax-exempt.
The result would mean that approximately $70 million annually would stay with the workers who earned the wages rather than going to the state.
There are approximately 250,000 people in Virginia who make a portion of their wages from tips, including in the food service, personal service, and hospitality industries, according to an estimate from The Virginia Department of Taxation and the Virginia Employment Commission.
“We have delivered over $5 billion in tax relief to date, and we remain committed to lowering the cost of living for hardworking Virginians. It’s their money, not the government’s,” said Youngkin. “By removing tips from taxable income, it will directly increase the take-home pay of hundreds of thousands of Virginians and give them more buying power, which in turn will improve financial stability, stimulate local economies, and honor the value of their hard work.”
Workers would continue to report tips on their state tax return as part of their annual wages and they would be able to claim a tax deduction on those portions of their wages.
Feature image of Gov. Glenn Youngkin by Michael Butcher
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