House Bill 900, a far-reaching proposal to overhaul Virginia’s sales tax system and transportation funding, was introduced this month and is now pending in the House Committee on Finance.
Key Takeaways
Date: January 14, 2026
Time: Introduced during the 2026 General Assembly session
Place: Virginia House of Delegates, Richmond
- What happened: Del. Richard C. “Rip” Sullivan Jr. introduced HB 900, proposing a lower sales tax rate paired with a broad expansion of taxable services and digital products.
- Why it matters: The bill would affect everyday purchases, from streaming subscriptions to haircuts, and create new regional transportation taxes in Northern Virginia and Fredericksburg.
- Who drove the news: Del. Richard C. “Rip” Sullivan Jr., D–Fairfax.
Full Coverage
House Bill 900 was prefiled on January 13 and formally introduced on January 14, sending it to the House Committee on Finance. No hearing has been scheduled, and the bill has not yet been debated or amended.
The proposal represents one of the most significant tax policy overhauls considered by Virginia lawmakers in years. It lowers the state portion of the sales tax from 4.3% to 4.0% while dramatically expanding the list of goods and services subject to tax. The approach reflects a long-standing argument at the General Assembly that Virginia’s tax code relies too heavily on goods, even as consumer spending has shifted toward services and digital products.
According to estimates from the Virginia Department of Taxation, the bill would generate about $2.6 billion in new revenue statewide in fiscal year 2027, growing to roughly $3.4 billion annually by fiscal year 2032. Revenue would be distributed among the state’s general fund, the Commonwealth Transportation Fund, and local and regional transportation funds. The department also estimates it would need additional staff and upgraded systems to administer the expanded tax base.
Under HB 900, digital goods and services would become taxable for the first time. This includes streaming services such as Netflix and Spotify, paid news and magazine subscriptions, cloud storage, software subscriptions, e-books, downloaded movies, and video games. Many of these are recurring monthly expenses that are currently not subject to Virginia sales tax.
The bill also extends sales tax to a wide range of personal and household services when paid directly by consumers. These include haircuts and nail services, dry cleaning, pet grooming and boarding, residential cleaning, landscaping, vehicle repair and maintenance, storage units, delivery services, and certain home repairs that do not require a permit. Medical, legal, accounting, and engineering services would remain exempt, as would internet access itself.
Food purchased for home consumption would remain exempt, but delivery fees, service charges, and platform fees charged by app-based services such as DoorDash, Uber Eats, and Grubhub could become taxable. In the Potomac and Rappahannock region, those taxable portions would also be subject to a new regional sales tax.
HB 900 creates a 0.2% regional sales tax in all localities served by the Potomac and Rappahannock Transportation Commission (OmniRide and Virginia Railway Express), including Prince William County, Stafford County, Spotsylvania County, and the cities of Manassas, Manassas Park, and Fredericksburg. The revenue would flow into a new PRTC Regional Transportation Fund.
Beginning in fiscal year 2028, the bill guarantees that money from the fund would support commuter rail operations and capital improvements, with remaining funds reserved for local transit projects, bus service expansion, and other transit capital needs. PRTC operates OmniRide and OmniLink bus services and jointly operates Virginia Railway Express with Northern Virginia agencies.
The bill also establishes a new regional highway use fee for electric, alternative fuel, and fuel-efficient vehicles garaged in PRTC localities. The fee would equal 29.34% of the existing statewide highway use fee, reflecting a policy goal of having vehicles that use roads but pay little gas tax contribute more to transportation funding.
Statewide, HB 900 restructures how transportation dollars are distributed, shifting more funding toward mass transit, rail, and regional transit agencies and setting minimum funding levels for commuter rail. The bill also adds new reporting and performance requirements for transit agencies, which could affect how funds are allocated.
Large tax packages often change significantly as the legislative session progresses, and HB 900 has not yet drawn public testimony or recorded support or opposition. Even if it does not advance in its current form, the proposal signals how lawmakers may frame future debates over taxation and transportation funding.
Annual members save nearly 30%. Upgrade today and SAVE, and keep up with the local news and events that matter most to you.
This article was created with AI assistance and reviewed by Potomac Local News editors for accuracy and clarity.
