TAX INCREASES
Sales tax: From 4.5 percent to 5.5 percent.
Cigarette tax: From 2.5 cents per pack to 25 cents per pack. Counties could, for the first time, also add up to a 50-cent tax on a pack.
Individual Income tax: Top rate increases from 5.75 percent to 6.25 percent for taxable incomes of more than $100,001.
TAX BREAKS
Income tax:
- New deductions for some seniors, fewer for other seniors with higher income.
- Personal exemption increases from $800 to $1,000.
- Standard deduction for individuals increases from $3,000 to $4,000.
- Income threshold for individuals having to file tax returns goes from $5,000 to $7,000.
- Income threshold for couples having to file tax returns increases from $8,000 to $14,000.
- "Marriage penalty" eliminated.
Estate tax:
- Estate tax eliminated for family-owned businesses and working farms worth up to $10 million.
Car tax:
- 100 percent reduction of tax on first $20,000 of vehicle's value, phased in by 2008.
Warner's office has provided this tax calculator on the Internet to figure out how his plan would affect you:
taxreform.governor.virginia.gov
NEW SPENDING
- $942 million in health care for poor and disabled.
- $762 million for public schools.
- $391 million for transportation.
- $179 million for prisons and law enforcement.
- $144 million for colleges and universities.
- $87 million to help replenish the "rainy-day" fund.
- $30 million for natural and historic resources.
- $8 million for pollution cleanup.
Raises:
- $104 million for 3 percent raises for state employees effective December 2005.
SAVINGS
- $31 million by using money from a state fund that gives localities low-interest loans for school construction.
- $28 million by reducing funds for technology reform.
- $27 million by spreading out employer retirement funding over 30 years instead of 23 years, with no impact on benefits.
- $27 million by continuing employer premium holiday on group life insurance coverage for state employees, with no impact on benefits.
More Info - Access Richmond Times Dispatch
Virginia would remain competitive with most of its neighbors in tax rates if Gov. Mark R. Warner's proposed tax increases are approved, according to figures provided by the Federation of Tax Administrators. But the proposal to raise the state cigarette tax from 2.5 cents a pack - the lowest rate in the nation - to 25 cents would put Virginia retailers at a disadvantage with the tobacco-growing states of North Carolina and Kentucky. In Kentucky, the cigarette tax is 3 cents per pack. In North Carolina, it is 5 cents. Tennessee has a tax of 20 cents per pack, and Maryland and the District of Columbia just raised their taxes to $1 a pack. West Virginia raised its cigarette tax by 38 cents last year to 55 cents per pack. Warner also has proposed giving localities the option to impose an additional cigarette tax of up to 50 cents per pack, beginning with 20 cents on July 1, up to 35 cents on July 1, 2005, and 50 cents on July 1, 2006. As a result, the cigarette tax could total 75 cents per pack in some areas if those localities imposed the full 50-cent tax and the state adopted the 25-cent tax. Warner's tax package does not include a gasoline-tax increase, but legislators are talking about an increase of 6.5 cents per gallon.
| Maximum Tax Rates in Virginia & Neighboring Areas | ||||||||
|---|---|---|---|---|---|---|---|---|
|
Va Current |
Va Proposed |
North Carolina |
Tennessee | Kentucky |
West Virginia |
Maryland |
District of Columbia |
|
| Sales Tax | 4.5% | 5.5% | 7% | 9.75% | 6% | 6% | 5% | 5.75% |
|
Top Individual Income Tax |
5.75% | 6.35% | 8.25% | none | 6% | 6.5% | 4.75% | none |
|
Gasoline Tax (cents/gal) |
17.5 | no increase | 24.3 | 21.4 | 16.4 | 25.35 | 24.5 | 20 |
| Cigarette Tax | 2.5 | 25 | 5 | 20 | 3 | 55 | $1.00 | $1.00 |