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Virginia Income Tax Treatment of Same-Sex Marriage

On October 6, 2014, the United States Supreme Court denied certiorari in the Bostic case, thereby upholding the Fourth Circuit Court of Appeals decision that overturned Virginia's ban on same-sex marriage.  Accordingly, same-sex marriages that are valid under the law of any state will now be recognized for Virginia income tax purposes.  For details, see Tax Bulletin 14-7 and the Same-Sex Marriage FAQs.


New Cap for 2014 Qualified Equity and Subordinated Debt Investment Tax Credit

Under the amended budget bill for the 2012-2014 biennium (2014 House Bill 5001) and the budget bill for the 2014-2016 biennium (2014 House Bill 5002), the Qualified Equity and Subordinated Debt Investment Tax Credit cap will increase to $5 million for taxable year 2014.  For taxable years after 2014, the tax credit cap will remain at the statutory cap of $5 million, unless the General Assembly takes future action to change it.  For complete information, see Tax Bulletin 14-5.


2013 Cap for Land Preservation Credit Announced - Updated

Previously, it was announced that the indexed tax credit cap for the Land Preservation Tax Credit for calendar year 2013 was $113,909,000.  However, legislation passed by the 2013 General Assembly (House Bill 1398) removed the credit's adjustment for inflation.  Therefore, the cap for calendar year 2013 and years to come has been reduced to $100 million.  Please see Tax Bulletin 13-6 for more information.


Income Tax Changes for 2013

 Deduction for Prepaid Funeral, Medical, and Dental Insurance Premiums:  Individuals age 66 or older with earned income of at least $20,000 and federal adjusted gross income no more than $30,000 will be allowed a deduction for Prepaid Funeral, Medical, and Dental Insurance Premiums and they may claim this deduction for taxable years beginning on and after January 1, 2013.  The deduction will be equal to the amount paid annually in premiums for a prepaid funeral insurance policy covering the individual, medical, or dental insurance for any person for whom the individual taxpayer may claim a deduction for such premiums under federal income tax laws. The deduction is not allowed for any portion of such premiums for which the taxpayer has been reimbursed, has claimed a deduction for federal income tax purposes, has claimed another Virginia income tax deduction or subtraction, or has claimed an income tax credit on their federal or Virginia return.  Life insurance premiums are not deductible under this legislation.

Voluntary Contributions to the Chesapeake Bay Watershed Implementation Plan:  As of July 1, 2013, voluntary contributions of individual income tax refunds made to the Chesapeake Bay Restoration Fund can now be used to fund the Chesapeake Bay Watershed Implementation Plan, in addition to helping fund the Chesapeake Bay and its tributaries restoration activities.

Neighborhood Assistance Act Credit:  2013 legislation expands the Neighborhood Assistance Act Tax Credit program by increasing the tax credit percentage from 40 percent to 65 percent of the value of donations.  HB 368 also expands the professional services eligible for tax credits to include services provided by mediators certified by the Judicial Council of Virginia.

Education Improvement Scholarships Tax Credit:  Effective for taxable years beginning on and after January 1, 2013, but before January 1, 2018, taxpayers may claim a credit against the individual income tax, corporate income tax, bank franchise tax, insurance premiums license tax, or tax on public service corporations for contributions to approved scholarship foundations.  Unused tax credits may be carried over for five years.  The credit is administered by the Virginia Department of Education.

Long-Term Care Insurance Premiums Credit:  The credit allowed for the first 12 months of premiums paid on a long-term care insurance policy expired on December 31, 2013.


Advancement of Virginia's Conformity to Federal EITC

Under emergency legislation (House Bill 1085; Chapter 1 of the 2014 Acts of Assembly and Senate Bill 288, Chapter 2 of the 2014 Acts of Assembly) passed by the 2014 General Assembly and signed by Governor McAuliffe, Virginia's conformity to the federal enhanced Earned Income Tax Credit (“EITC”) was extended to taxable years ending before January 1, 2018.

The General Assembly did not advance Virginia’s date of conformity to the Internal Revenue Code.  Therefore, Virginia’s date of conformity remains January 2, 2013.  However, Congress did not enact any federal tax legislation that would impact Virginia after January 2, 2013.  Taxpayers may still use their federal adjusted gross income (or federal taxable income, for corporations) as the starting point for calculating their Virginia taxable income for Taxable Year 2013, except as provided in Tax Bulletin 13-3 (Public Document 13-19 (2/15/2013)) and Tax Bulletin 13-13 (Public Document 13-209 (11/08/2013)).

Tax Bulletin 14-1 provides taxpayers with directions on how to reconcile this legislation and Virginia’s January 2, 2013 date of conformity to the Internal Revenue Code with their 2013 Virginia income tax returns.



Last Updated 10/9/2014 13:50


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