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HB 956

License taxes; deduction for out-of-state receipts.

2026 Regular Session Introduced by Vivian Watts

HB 956 would let Virginia businesses deduct out-of-state revenues from license tax obligations, reducing tax liability for multi-state companies but cutting state revenue.

Subcommittee failed to recommend reporting (4-Y 6-N)
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Bill Summary · HB 956

Legislative bill overview

HB 956 would allow businesses in Virginia to deduct out-of-state receipts from their license tax calculations, effectively reducing the taxable base for businesses that generate revenue across state lines. This targets businesses engaged in interstate commerce by exempting revenue earned outside Virginia from state-level license tax obligations.

Why is this important

License taxes are imposed on many Virginia businesses and can significantly affect profitability, particularly for companies with multi-state operations. This bill would directly reduce tax liability for qualifying businesses, potentially making Virginia more competitive for companies with regional or national markets, though it would also reduce state revenue unless offset elsewhere.

Potential points of contention

  • Revenue impact: The fiscal impact statement suggests meaningful state revenue loss, which may require tax increases elsewhere or budget reductions
  • Fairness concerns: Businesses operating solely in Virginia would pay full license taxes while multi-state competitors get deductions, raising questions about equal treatment
  • Definition and administration: Determining what qualifies as "out-of-state receipts" could be complex and subject to aggressive tax planning or dispute
  • Economic rationale: Unclear whether the tax competitiveness benefit justifies the revenue loss, or whether it primarily benefits large corporations over small businesses

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

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