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HB 1743

License tax, local; work group to review deduction for receipts attributable to out-of-state.

2025 Regular Session Introduced by Joe McNamara and 1 co-sponsor

Virginia establishes a work group to study and recommend changes to how local license taxes deduct out-of-state business receipts, effective July 2025.

Acts of Assembly Chapter text (CHAP0192)
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Bill Summary · HB 1743

Legislative bill overview

HB 1743 establishes a work group in Virginia to review and analyze how local license taxes should treat deductions for receipts generated from out-of-state business activities. The bill directs this work group to study current deduction practices and make recommendations to the legislature on potential modifications to how Virginia localities tax businesses with significant out-of-state revenue.

Why is this important

Many Virginia businesses generate revenue both within and outside the state, and how localities tax this revenue affects business competitiveness and tax fairness. The outcome of this work group could influence whether Virginia cities and counties modify their tax codes, potentially affecting how much local tax businesses owe and which jurisdictions benefit from business tax revenue.

Potential points of contention

  • Tax base erosion concerns: Local governments may worry that expanding out-of-state deductions could reduce their tax revenue from multi-state businesses operating in their jurisdictions
  • Interstate commerce fairness: Businesses may argue current deduction practices unfairly tax out-of-state income, while others contend all revenue sourced to Virginia activity should be taxed locally
  • Implementation complexity: Different business models (service-based, product-based, digital) generate revenue differently, making uniform deduction rules difficult to apply fairly across industries

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

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