The “Tax Cuts and Jobs Act” signed into law last December brought tax relief to middle-class Americans across the country. However, it will have the unintended consequence of causing tax bills to rise for over middle-class taxpayers and will hit Stafford County residents especially hard given Stafford’s high rate of homeownership and burgeoning middle-class.
In a recent video posted on Facebook, Stafford County Commissioner of the Revenue Scott Mayausky explains the incompatibility issue that exists between the federal and state returns and how it will impact Virginia’s middle-class. The video has connected with taxpayers as it was shared more than 275 times and watched 10,000 times within a 4-day period.
At issue is the “Tax Cuts and Jobs Act” doubling of the standard deduction to $24,000. This change will cause hundreds of thousands of people to stop itemizing deductions and take the standard deduction.
While this will save Virginian’s on the federal return, it will hurt them on the state return because Virginia law requires they make the same deduction status on the state return as they did on the federal return.
The video explains this process through a sample return of a couple filing jointly with $20,000 of itemized deductions on the federal return. If that same couple takes the $24,000 standard deduction (instead of itemizing) on the federal return, their state tax bill will rise by $691.
This hidden tax increase will generate $600 million of new revenue making it one of the most significant tax increases in the history of Virginia with very few people know about the issue, or are prepared for the dramatic rise in their state income tax bill that will come due next spring.
The video’s goal is to educate Virginia taxpayers who are largely unaware of this issue and provide transparency to state tax policies.
