Governor Glenn Youngkin Champions No Tax On Tips

RICHMOND – Today, Governor Glenn Youngkin announced a proposal to exempt Virginia’s income tax from service tips. This proposal would return approximately $70 million per year to hardworking Virginians, fulfilling Governor Youngkin’s promise to reduce the cost of living in the Commonwealth. This proposal builds on the $5 billion tax relief that Virginians have already received under his administration.

“We have provided over $5 billion of tax relief and remain committed to lowering costs of living for hardworking Virginians. “It’s not the government’s money. It’s ours,” said Glenn Youngkin. By removing tips as taxable income from Virginians, this will increase their take-home pay and give them greater purchasing power. This will in turn improve financial stability and stimulate local economies.

Virginia Department of Taxation (VAD) and Virginia Employment Commission (VAEC) estimate that over 250,000 Virginians in the hospitality, food service and personal service industries (such hairdressers and concierges), as well as the food service and personal service industries (such as hairdressers), could benefit from proposed tax relief. The tax relief would also apply to workers who receive tips as a result of their employment in another industry.

Virginians earning tips can claim a deduction for their state taxes, if the income is included as part of their federal adjusted gross revenue. To ensure compliance, the Department of Taxation uses IRS data and information from employers’ W-2 forms.

The Commonwealth’s strong financial position, as evidenced by its record employment, growing revenues and surpluses and AAA bond rating, allows it to provide meaningful tax relief to Virginians and maintain fiscal responsibility while investing in vital public services.