SB 528 — Income tax, state; military benefits subtraction.

SPECIAL SESSION I ENROLLED VIRGINIA ACTS OF ASSEMBLY ––-- 2022 SPECIAL SESSION I CHAPTER E15 An Act to amend and reenact § 58.1-322.02 of the Code of Virginia, relating to income tax;

R O [S 528] Approved LAugust L4, 2022 Be it enacted by the General Assembly of Virginia:

E § 58.1-322.02.

DIn adjustedcomputing grossVirginia income,taxable thereincome shallpursuant beto subtracted:to § 58.1-322, to the extent included in federal 1.adjusted gross income, there shall be subtracted:

Income1. derived from obligations, or on the sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission, or instrumentality of the United States to the extent exempt from state income taxes under the laws of the United States, including, but not limited to, stocks, bonds, treasury bills, and treasury notes but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.

Income derived from obligations, or on the sale or exchange of obligations, of the United States and on obligations or securities of any authority, commission, or instrumentality of the United States to limited to, stocks, bonds, treasury bills, and treasury notes but not including interest on refunds of federal taxes, interest on equipment purchase contracts, or interest on other normal business transactions.

Income derived from obligations, or on the sale or exchange of obligations, of the CommonBealthCommonwealth or of any political subdivision or instrumentality of the Commonwealth.

23. income taxation solely pursuant to § 86 of the Internal Revenue Code.

Benefits received under Title II of the Social Security Act and other benefits subject toEfederalto 4.federal income taxation solely pursuant to § 86 of the Internal Revenue Code.

4.

7.

Any amount included therein less than $600 from a prize awarded by the Virginia Lottery.

Amounts received by an individual, not to exceed $1,000 for taxable years beginning on or before December 31, 2019, and $5,000 for taxable years beginning on or after January 1, 2020, as a reward for information provided to a law-enforcement official or agency, or to a nonprofit corporation created exclusively to assist such law-enforcement official or agency, in the apprehension and conviction of employeeperpetrators of, or under contract with, a law-enforcement agency, a victim or the perpetrator of thecrimes. crime for which the reward was paid, or any person who is compensated for the investigation of crimes or accidents.

This subdivision shall not apply to the following:

an individual who is an employee of, or under contract with, a law-enforcement agency, a victim or the perpetrator of the crime for which the reward was paid, or any person who is compensated for the investigation of crimes or accidents.

stock11. bonus plan as described by § 401 of the Internal Revenue Code, an individual retirement accountor or annuity established under § 408 of the Internal Revenue Code, a deferred compensation plan as defined by § 457 of the Internal Revenue Code, or any federal government retirement program, the contributions to which were deductible from the taxpayer's federal adjusted gross income, but only to the extent the contributions to such plan or program were subject to taxation under the income tax in another state.

Any income received during the taxable year derived from a qualified pension, profit-sharing, or stock bonus plan as described by § 401 of the Internal Revenue Code, an individual retirement account or annuity established under § 408 of the Internal Revenue Code, a deferred compensation plan as defined by § 457 of the Internal Revenue Code, or any federal government retirement program, the contributions to which were deductible from the taxpayer's federal adjusted gross income, but only to the extent the contributions to such plan or program were subject to taxation under the income tax in another state.

Any income attributable to a distribution of benefits or a refund from a prepaid tuition contract or savings trust account with the Virginia College Savings Plan, created pursuant to Chapter 7 limited(§ to23.1-700 incomeet attributableseq.) to a refund in the event of aTitle beneficiary's23.1. death, disability, or receipt of a scholarship.

The subtraction for any income attributable to a refund shall be limited to income attributable to a refund in the event of 4a 13.beneficiary's death, disability, or receipt of a scholarship.

All13. military pay and allowances, to the extent included in federal adjusted gross income and not otherwise subtracted, deducted, or exempted under this section, earned by military personnel while serving by order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area that is treated as a combat zone for federal tax purposes pursuant to § 112 of the Internal Revenue Code.

All military pay and allowances, to the extent included in federal adjusted gross income and not otherwise subtracted, deducted, or exempted under this section, earned by military personnel while of 4 serving by order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area that is treated as a combat zone for federal tax purposes pursuant to § 112 of the Internal Revenue Code.

The death benefit payments from an annuity contract that are received by a beneficiary of such of 4 contract, provided that (i) the death benefit payment is made pursuant to an annuity contract with an insurance company and (ii) the death benefit payment is paid solely by lump sum.

The subtractioEsubtraction under this subdivision shall be allowed only for that portion of the death benefit payment that is included in federal adjusted gross income.

N 22.

Any gain recognized from the sale of launch services to space flight participants, as deRineddefined in 49of 4 U.S.C.

§ 70102, or launch services intended to provide individuals with the training or experience of servicesa mustlaunch, bewithout performedperforming in Virginia or originate from an airportactual orlaunch. spaceport in Virginia.ioO, launch 23.

To qualify for a deduction under this subdivision, launch services must be performed in Virginia or originate from an airport or spaceport in Virginia.

23.

E 24.

To qualify for a subtraction under this subdivision, such income shall be attributable to an investment in a "qualified business," as defined in § 58.1-339.4, or in any other technology business approved by the Secretary of Administration, provided that the business has its principal office or facility in the Commonwealth and less than $3 million indin annual revenues in the fiscal year prior to the investment.

No taxpayer who has claimed a tax credit for an investment in a "qualified business" under § 58.1-S39.458.1-339.4 shall be eligible for the subtraction under this subdivision for an investment in the same busi5ess.business.

For taxable years beginning on and after January 1, 2014, any income of an account holde8holder for the taxable year taxed as (i) a capital gain for federal income tax purposes attributable to suRhsuch person's first-time home buyer savings account established pursuant to Chapter 12 (§ 36-171 et seq.) of Title 36 and (ii) interest income or other income for federal income tax purposes attributable to such person's first-time home buyer savings account.

Notwithstanding the statute of limitations on assessments contained in § 58.1-312, any subtraction taken under this subdivision shall be subject to recapture in the taxable year or years in which moneys or funds withdrawn from the first-time home buyer savings account were used for any purpose other than the payment of eligible costs by or on behalf of a qualified beneficiary, as provided under § 36-174.

(ii) a disbursement of assets of the throughaccount 1330;pursuant to a filing for protection under the United States Bankruptcy Code, 11 U.S.C.

§§ 101 through 1330;

investment27. partnership carried interest income), attributable to an investment in a Virginia venture capital account.

a.

Income, including investment services partnership interest income (otherwise known as investment partnership carried interest income), attributable to an investment in a Virginia venture capital account.

and (iii) provides equity in the company to doesthe notVirginia includeventure acapital companyaccount thatin isexchange anfor individuala orcapital soleinvestment. proprietorship.t.

"Qualified portfolio company" "Virginiadoes venturenot capitalinclude account"a meanscompany an investment fund that hasis beenan certifiedindividual byor thesole ofproprietorship. 4 Department as a Virginia venture capital account.