Bill > SB268

This bill establishes a new refundable individual income tax credit in Virginia for taxable years 2027 through 2031, which means taxpayers can receive this credit as a refund even if they owe no tax. The credit amount will be equivalent to the federal child tax credit allowed for each "qualifying child," a term defined by referencing Section 24 of the Internal Revenue Code, which generally refers to a dependent child meeting specific age and relationship requirements. To be eligible, individuals or married couples filing jointly must have a household income at or below 300 percent of the federal poverty level in the preceding taxable year, and only one credit can be claimed per qualifying child. This new credit will be reduced by any amount claimed for the same child under a different existing Virginia tax credit (§ 58.1-339.8), and the total amount of these new credits allowed statewide will be capped at $5 million per year, allocated on a first-come, first-served basis. If the credit exceeds a taxpayer's tax liability, the excess will be refunded by the Tax Commissioner within 90 days of the tax return filing, mirroring the refund process under the federal child tax credit. Importantly, this credit will not be allowed if the corresponding federal credit was denied, reduced, or recaptured due to fraud or noncompliance with federal rules, and the Tax Commissioner will create guidelines for claiming this credit, which will be exempt from standard administrative procedures.

Budget and Finance

https://lis.virginia.gov/bill-details/20261/SB268