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HB 1351

Income tax, state; subtraction for retirement income of certain federal employees.

2026 Regular Session Introduced by Jay Leftwich

HB 1351 exempts qualifying federal employee retirement income from Virginia state income tax, reducing state revenue while benefiting federal retirees.

Assigned HFIN sub: Subcommittee #2
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WeVote Research Nonpartisan
Bill Summary · HB 1351

Legislative bill overview

HB 1351 proposes to create a state income tax subtraction for retirement income received by certain federal employees in Virginia. The bill would allow qualifying federal retirees to exclude a portion of their retirement income from Virginia's taxable income calculation, reducing their state tax liability.

Why is this important

Federal employees and military retirees represent a significant demographic in Virginia, particularly near Washington D.C. and military installations. This provision would affect state revenue and could influence whether federal retirees choose to remain in or relocate to Virginia during retirement.

Potential points of contention

  • Revenue impact: The fiscal impact statement indicates this would reduce state tax collections, requiring either budget cuts elsewhere or alternative revenue sources
  • Fairness concerns: Creating tax benefits for federal retirees while not extending similar treatment to private-sector retirees raises equity questions about preferential tax treatment based on employment sector
  • Definition scope: The bill's language regarding "certain federal employees" requires clarity—which employees qualify, which don't, and whether this creates administrative complexity and potential disputes with taxpayers

Compiled from official sources — confirm details with the bill’s official record.

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