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Bill

HB 978

Retail Sales and Use Tax; taxation on various services, includes digital personal property.

2026 Regular Session Introduced by Vivian Watts

HB 978 expands Virginia sales tax to include various services and digital property currently exempt, broadening the tax base and generating new state revenue while increasing costs for consumers and digital service providers.

Continued to next session in Finance (Voice Vote)
0
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Bill Summary · HB 978

Legislative bill overview

HB 978 expands Virginia's retail sales and use tax to cover various services and digital personal property that are currently exempt from taxation. The bill modifies the tax code to broaden the definition of taxable transactions beyond traditional goods, bringing digital products and certain service categories into the tax base.

Why is this important

This represents a significant shift in Virginia's tax structure, as digital services and products have largely escaped sales tax historically. The expansion could generate substantial new revenue for the state while raising costs for consumers and businesses purchasing these services, particularly affecting tech companies, streaming services, digital content providers, and service industries. It reflects a national trend of states attempting to modernize tax codes for the digital economy.

Potential points of contention

  • Definitional ambiguity: "Digital personal property" and "various services" may be too vague, creating uncertainty about which products and services are actually taxable and complicating compliance
  • Regressive impact: Sales taxes disproportionately burden lower-income households, and expanding them to services could worsen this effect
  • Competitive disadvantage: Virginia businesses offering taxable services may face higher costs than competitors in states without similar expansions, potentially driving business relocation or online purchases out-of-state
  • Implementation complexity: Requires businesses to understand and track new tax obligations; out-of-state digital service providers may resist collection requirements

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

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