RICHMOND, Va. — Governor Glenn Youngkin announced on Monday a budget proposal to exempt service tips from Virginia’s State income tax.
According to a news release from his administration, this proposal will build on more than $5 billion in tax relief already delivered to Virginians.
“We have delivered over $5 billion in tax relief to date, and we remain committed to lowering the cost of living for hardworking Virginians. It’s their money, not the government’s,” Youngkin said in the news release.
Under the proposal, “Virginians who earn tips will be able to claim a deduction on their state tax return, provided the income is included in their federal adjusted gross income.”
Both industry associations and local businesses in Hampton Roads say the move could be a game changer.
“I think it’s great,” said Adam Herrick, manager at Colleywood Cuts in Norfolk. “The past four years since COVID, things have been a little tough. So anything that helps get the bills paid, a little more money in the pocket, we’ll take it.”
“I think, from the standpoint of an employee, it’s wonderful that they’re going to be able to take the money that was given to them and have it be a whole number, as opposed to paying a percentage of taxes on that,” said Michael Mauch, President of the Virginia Beach Restaurant Association. “But from an employer standpoint, it’s just an added benefit, and hopefully it’ll help to bring in a few more employees.”
Youngkin said the plan is projected to return millions of dollars to those working in service industries. Tommy Herbert, the director of governmental affairs for the Virginia Restaurant, Lodging & Travel Association, said the change will affect everyone from barbers to bartenders.
“The folks who are right there on the front line serving you in the labor force get to take home a little bit more of what they earn,” Herbert said.