HB 472 — Income tax, state; increases standard deduction.

SESSION INTRODUCEDHOUSE 22100741DSUBSTITUTE I22105245D HOUSE BILL NO.

472 OfferedAMENDMENT JanuaryIN 12,THE 2022NATURE NOF PrefiledA JanuarySUBSTITUTE 11,(Proposed 2022by Tthe House Committee on Finance on February 2, 2022) (Patron Prior to Substitute––Delegate McNamara) A Bdeduction.ndBILL to amend and reenact § 58.1-322.03 of the Code of Virginia, relating to income tax;

stanRardstandard ––––––––––Be Patrons––McNamara,it Avoli,enacted Ballard,by Bloxom,the Campbell,General J.L.,Assembly Cherry,of Cordoza,Virginia: Davis, Fowler, O Greenhalgh, Kilgore, LaRock, Leftwich, March, McGuire, O'Quinn, Orrock, Runion, Scott, P.A.,D Tata, Taylor, Wachsmann, Walker, Ware, Wiley, Williams and Wyatt;

Senators:1.

Suetterlein and Ruff –––––––––– U Referred to Committee on Finance C –––––––––– 1.

E § 58.1-322.03.

D In computing Virginia taxable income pursuant to § 58.1-322, there shall be deducted from Virginia adjusted gross income as defined in § 58.1-321:

1.taxpayer has elected for the taxable year to itemize deductions on his federal return, but reduced by the amount of income taxes imposed by the Commonwealth or any other taxing jurisdiction and deducted on such federal return and increased by an amount that, when added to the amount deducted underO § 170 of the Internal Revenue Code for mileage, results in a mileage deduction at the state level for such purposes at a rate of 18 cents per mile;

a.or U b.

TheProvided amountthat allowable for itemized deductions for federal income tax purposes where the taxpayer has electednot itemized deductions for the taxable year to itemize deductions on his federal return, but reduced by the amount of income taxes$3,000 imposedfor bysingle theindividuals Commonwealthand or$6,000 anyfor othermarried taxingpersons jurisdiction(one-half andof deducted on such federalamounts returnin and increased by an amount that, when added to the amountcase deductedof undera suchmarried purposesindividual atfiling a rateseparate ofreturn) 18and; cents per mile;

orresults(ii) infor ataxable mileageyears deductionbeginning aton theand stateafterEJanuary level1, 2019, but before January 1, 2026 2022, $4,500 for b.single individuals and $9,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return);

Providedand that(iii) for taxable years beginning on and after January 1, 2022, but before January 1, 2026, $9,000 for single individuals and $18,000 for married persons (one-half of such amounts in the taxpayercase hasof nota itemizedmarried deductionsS dependent on another taxpayer's return for the taxable year onmay hiscompute federalthe incomededuction taxonly return:with respect to earned income.

(i) for taxable years beginning before January 1, 2019, and on and after January 1,72026, $3,000 for single individuals and $6,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return) and;

(ii) for taxable years beginning on and after January 1, 2019, but before January 1, 2026 2022, $4,500 for single individuals and $9,000 for married persons (one-half of such amounts in the case of a married individual filing a separate return);

and (iii) for taxable years beginning on and after January 1, 2022, $9,000 for single individuals and $18,000 for For purposes of this section, any person who may be claimed as a dependent on another taxpayer'sreturn).

return for the taxable year may compute the deduction only with respect to earned income.

33S b.

Each blind or aged taxpayer as defined under § 63(f) of the Internal Revenue Code shall bT entThe additional deduction for blind or aged taxpayers allowed under this subdivision shall be 34allowable entitledregardless toof anwhether additionalthe personaltaxpayer exemptionitemizes indeductions for the amounttaxable ofyear $800.for federal income 36 tax purposes.

35T The37 additional3. deduction for blind or aged taxpayers allowed under this subdivision shall be 36 allowable regardless of whether the taxpayer itemizes deductions for the taxable year for federal income tax3.

A deduction equal to the amount of employment-related expenses upon which the federal credit is 38 based under § 21 of the Internal Revenue Code for expenses for household and dependent care services 39 necessary for gainful employment.

4.T permanent foster care placement as defined in § 63.2-908, provided that the taxpayer can also cEaim ther child as a personal exemption under § 151 of the Internal Revenue Code.

An additional $1,000 deduction for each child residing for the entire taxable year in a home under permanent foster care placement as defined in § 63.2-908, provided that the taxpayer can also claim the child as a personal exemption under § 151 of the Internal Revenue Code.

A deduction in the amount of $12,000 for individuals born after January 1, 1939, who have federalattained adjusted gross income exceeds $50,000 for single taxpayers or $75,000 for married taxpayers.ted For married taxpayers filing separately, the deductionage shall be reduced by $1 for every $1 that the total combined adjusted federal adjusted gross income of both65. spouses exceeds $75,000.

ForThis thededuction purposesshall ofbe thisreduced subdivision,by "adjusted$1 federalfor adjustedevery gross$1 income"that meansthe federaltaxpayer's adjusted grossFor incomemarried minustaxpayers anyfiling benefitsseparately, receivedthe underdeduction Titleshall IIbe ofreduced theby Social$1 Securityfor Actevery and$1 otherthat benefitsthe subjecttotal tocombined adjusted federal incomeadjusted taxationgross solelyincome pursuant to § 86 of theboth Internalspouses Revenueexceeds Code,$75,000. as amended.

For the purposes of this subdivision, "adjusted federal adjusted gross income" means federalHadjusted gross income minus any benefits received under Title II of the Social Security Act and other beBefits subject to federal income taxation solely pursuant to § 86 of the Internal Revenue Code, as ame7ded.

The amount an individual pays as a fee for an initial screening to become a possible boneboneHmarrow marrowdeduction donor,for if (i) the individualpayment isof not reimbursed for such fee oron (ii)his thefederal individualincome hastax notreturn. claimed a ded7.

individual has not clai1ed a 7.

A deduction shall be allowed to the purchaser or contributor for the amount paid or contributed HB472 2 of 3 during the taxable year for a prepaid tuition contract or college savings trust account entered into with the Virginia College Savings Plan, pursuant to Chapter 7 (§ 23.1-700 et seq.) of Title 23.1.

No deduction HB472H1 2 of 3 shall be allowed pursuant to this subdivision 7 if such payments or contributions are deducted on the purchaser's or contributor's federal income tax return.

(ix) any advanced oil-fired furnace with a minimum annual fuel-utilization of 3 rating of 85;

The lesser of $5,000 or the amount actually paid by a living donor of an organ or other Iivingliving tissue for unreimbursed out-of-pocket expenses directly related to the donation that arose withNnwithin 12 months of such donation, provided that the provisionsdonor ofhas §not 213taken a medical deduction in accordance with of 3 the Internaltaxable Revenueyear Codein forwhich suchthe expenses.donation is made or the taxable year in which the 12-month periodken in expires.

The14. deduction may be taken in the taxable year in which the donation is made or the taxable year in which the 12-month periodT expires.

RFor 14.taxable years beginning on and after January 1, 2013, the amount an individual age 66 or excess of $30,000 for the year pays annually in premiums for (i) a prepaid funeral insurance policy covering the individual or (ii) medical or dental insurance for any person for whom individual tax filers "earned income" means the same as that term is defined in § 32(c) of the Internal Revenue Code.

ForThe taxablededuction yearsshall beginningnot onbe andallowed afterfor Januaryany 1,portion 2013, the amount an individual age 6O or excess of $30,000such for the year pays annually in premiums paid for (i)which a prepaid funeral insurance policy covering the individual orhas (ii)(a) medicalbeen orreimbursed, dental(b) insuranceclaimed fora anydeduction person for whomfederal individualincome tax filerspurposes, may(c) claimclaimed a deduction foror suchincome premiumstax undercredit federalpursuant incometo taxthis laws.chapter.

As used in this subdivisUon, "earned income" means the same as that term is defined in § 32(c) of the Internal Revenue Code.CThe been reimbursed, (b) claimed a deduction for federal income tax purposes, (c) claimed a deduction or) subtraction under another provision of this section, or (d) claimed a federal income tax credit or any income15. tax credit pursuant to this chapter.

DFor 15.taxable years beginning on and after January 1, 2018, 20 percent of business interest disallowed as a deduction pursuant to § 163(j) of the Internal Revenue Code.

For taxablepurposes years beginning on and after January 1, 2018, 20 percent of businessthHs interestRevenue subdivision,Code."business "business interest" means the same as that term is defined under § 163(j) of the Internal Revenue16. Code.

16.For taxable years beginning on and after January 1, 2019, the actual amount of real and personal solely on account of the dollar limitation imposed on individual deductions by § 164(b)(6)(B) oU the Internal Revenue Code.

For17. taxable years beginning on and after January 1, 2019, the actual amount of real and personal solely on account of the dollar limitation imposed on individual deductions by § 164(b)(6)(B) of the Internal Revenue Code.

HFor 17.taxable years beginning on and after January 1, 2020, but before January 1, 2021, upSto account of the portion of subdivision B 10 of § 58.1-301 related to Paycheck Protection ProgramEloans.