Income tax, corporate; reduction of rate.

Plain English Breakdown

Checked against official source text during the last sync.

Reducing Corporate Income Tax Rate

This bill reduces the corporate income tax rate in Virginia from six percent to two point two five percent over several years.

What This Bill Does

• Reduces the current six percent corporate income tax rate to four point seven five percent starting January 1, 2026.
• Further lowers the tax rate to three point five percent for taxable years beginning on or after January 1, 2027.
• Sets the final tax rate at two point two five percent for all future taxable years starting from January 1, 2028.

Who It Names or Affects

• Corporations organized under Virginia laws
• Foreign corporations with income from Virginia sources

Terms To Know

Taxable year

A period of time used for calculating and paying taxes, usually a calendar year.

Virginia taxable income

The amount of money that corporations must pay tax on in Virginia after deductions are applied.

Limits and Unknowns

• This bill only affects future taxable years starting from January 1, 2026.
• It does not change how much tax was owed before the new rates were set.

Official Summary Text

Corporate income tax rate; reduction.
Reduces the corporate income tax rate by 1.25 percent each taxable year from the current six percent rate until the rate equals 2.25 percent for taxable year 2028 and thereafter.

Current Bill Text

A BILL to amend and reenact §
58.1-400
of the Code of Virginia, relating to corporate income tax rate.

Be it enacted by the General Assembly of Virginia:

1. That §
58.1-400
of the Code of Virginia is amended and reenacted as follows:

§
58.1-400
. Imposition of tax.

A tax
at the rate of six percent
is hereby annually imposed on the Virginia taxable income for each taxable year of every corporation organized under the laws of the Commonwealth and every foreign corporation having income from Virginia sources
(i) for taxable years beginning
before January 1, 2026,
at the rate of
six percent
;
(ii) for taxable years beginning on and after January 1, 2026, but before January 1, 2027
,

at the ra
te of
4.75 percent
;
(iii)
for taxable years beginning on and after January 1, 2027, but before January 1, 2028,
at the rate of
3.5 percent
;
and (iv) for taxable years beginning
on and after January 1, 202
8
,
at the rate of 2.25 percent
.

2. That the provisions of this act shall be effective only for taxable years beginning on and after January 1, 2026.