Virginia House Bill 72, introduced in the 2026 Regular Session of the Virginia House of Delegates, proposes significant updates to the state’s real property tax laws. Specifically, the bill aims to amend and reenact § 58.1-3221.1 of the Code of Virginia, focusing on the classification of land and improvements for tax purposes. The primary effect of this legislation is to grant the City of Fredericksburg the authority to treat improvements to real property as a separate class for local taxation.
Currently, § 58.1-3221.1 establishes that in the Cities of Fairfax, Poquoson, Richmond, and Roanoke, improvements to real property are declared to be a separate class of property. These improvements form a distinct classification for the purposes of imposing local real property taxes. The governing body in each of these cities has the power, following the procedures in § 58.1-3007 for public notice and hearings, to set a tax rate on the improvements that is different from the rate on the land. The law mandates that this different rate on improvements shall not be zero and shall not be higher than the rate on the land. In addition, the section prohibits any change to the valuation of the real property based on this classification.
House Bill 72 would extend these exact provisions to the City of Fredericksburg. Upon enactment, the city would be able to declare improvements as a separate class and adjust the tax rate accordingly, subject to the same restrictions. The bill specifies that the rate on improvements must remain above zero and must stay at or below the rate applied to the land. This structure ensures that improvements are always subject to some level of taxation while permitting flexibility in how the burden is distributed between land and structures.
The effective date for House Bill 72, if it passes, is July 1, 2026. This allows time for the City of Fredericksburg to consider whether and how to implement the new authority.
According to the fiscal impact statement issued by the Department of Taxation, House Bill 72 carries no fiscal consequences for the state government. There would be no additional administrative costs or revenue changes at the state level. At the local level, the City of Fredericksburg could experience unknown impacts on its administrative costs and revenues only if it decides to exercise the authority provided by the bill. Since the decision rests with the local governing body, no specific estimates are provided. The statement concludes that no budget amendment is necessary and no technical amendments are required.
The legislation maintains the requirement for public involvement. Before any differential tax rates could be levied, the city must provide notice to the public and allow for comments and hearings. This ensures transparency and gives residents a voice in any potential changes to the tax structure.
House Bill 72 does not alter the way real property is assessed or valued in Fredericksburg. The assessments would continue under existing methods, with the new classification applying only to the imposition of tax rates afterward. This separation of valuation and taxation is a key feature of the existing law that the bill preserves.
By adding Fredericksburg to the list of cities with this option, the bill promotes uniformity in the tax tools available to Virginia localities. The other cities—Fairfax, Poquoson, Richmond, and Roanoke—have had this authority for years, yet none have chosen to implement the differential rates to date. This fact illustrates that the provision is an available option rather than a requirement, leaving the choice to local leaders.
The parameters set forth in the bill, including the prohibition on zero rates for improvements and the cap on the improvement rate, provide built-in protections. These rules prevent the complete shifting of tax burden away from improvements and ensure that land and improvements remain linked in their tax treatment to some degree.
In practical terms, if the City of Fredericksburg were to adopt this system, it could set a higher tax rate on land values and a lower rate on building values, for instance, as long as the lower rate exceeds zero and does not surpass the land rate. Such an approach would be fully compliant with the amended code.
House Bill 72 represents a modest but meaningful update to Virginia’s real property tax framework. It focuses solely on extending an existing mechanism to one additional city without creating new mandates or affecting statewide policies. The emphasis on local decision-making, combined with the safeguards on rate setting, allows for tailored solutions that respect the unique circumstances of Fredericksburg.
The bill’s introduction during the 2026 session comes at a time when local governments across the state are exploring ways to optimize their revenue sources. By providing this authority, the legislation equips the City of Fredericksburg with an additional option for structuring its property taxes in a manner consistent with state law.
Overall, the detailed provisions of House Bill 72 ensure that any implementation in Fredericksburg would follow established legal standards. The amendment to § 58.1-3221.1 would insert the City of Fredericksburg into the relevant subsections, granting it the same rights and responsibilities as the other listed cities regarding the classification and differential taxation of land and improvements.
This completes the core elements of the bill, which remains focused on authorizing local flexibility within defined limits. The absence of state fiscal impact further emphasizes the localized nature of the change proposed by House Bill 72.
