Bill > HB378

This bill, effective for taxable years beginning on or after January 1, 2027, imposes a new Net Investment Income Tax on individuals, trusts, and estates in Virginia. This tax will be 3.8 percent of the lesser of an individual's "net investment income" or their "federal modified adjusted gross income" minus a $500,000 threshold amount. "Net investment income" generally refers to income from investments, with specific adjustments including the exclusion of certain U.S. government obligations, the inclusion of interest from other state and local government obligations outside Virginia, and gains from specific Internal Revenue Code sections. It also includes the net investment income of certain "incomplete gift non-grantor trusts" where the grantor transferred assets that are treated as incomplete gifts for tax purposes. "Federal modified adjusted gross income" is similarly defined with some of the same adjustments. The bill also outlines how the tax will be calculated for non-resident individuals and for estates and trusts, ensuring it's based on income allocable to Virginia. All references to the Internal Revenue Code are based on its version as of January 1, 2026.

Budget and Finance

https://lis.virginia.gov/bill-details/20261/HB378