Bill > HB865

This bill establishes a new income tax bracket for Virginia residents, effective January 1, 2024, that imposes a 10 percent tax rate on annual income exceeding $1 million. The existing tax structure is modified to maintain the current 5.75 percent rate for income between $17,000 and $1 million, while adding the new top bracket for high-income earners. Importantly, the bill mandates a specific allocation of the revenues generated by this new tax bracket: 50 percent will be directed to providing additional basic aid funding for public schools, distributed through existing mechanisms; 30 percent will be dedicated to the Child Care Subsidy Program administered by the Department of Social Services; and 20 percent will go to the Virginia Housing Trust Fund. A critical provision ensures that these new funds are intended to supplement, not replace, existing funding for these programs, meaning the allocated money must increase the total resources available rather than simply substituting for current state expenditures. This approach aims to generate additional resources for education, childcare, and housing while targeting high-income taxpayers for the additional contribution.