Virginia’s Governor, Glenn Youngkin, proposed a new budget plan for the state this week. In his proposal, he included tax relief plans that would offer some relief on tips and cars. One of his biggest platforms that he continues to stand on is giving money back to middle and lower income families, which he says this budget will do. The proposal would not just be for the upcoming budget cycle, as the state follows a two year budget cycle system, but it would also make amendments to the current budget. According to a close advisor to Youngkin, this was fueled by surplus funds that the state has as the fiscal year of 2024 comes to an end. Youngkin gave a speech to announce details of his plan, describing Virginia as “growing… leading… and winning.”

The budget will have to be revised by the money committees in the state legislature before going to a vote.

Some worry that because the General Assembly chambers has a Democratic majority, the budget is at risk. However, House of Appropriations Chair Luke Torian said that the budget is not off the table at all. He stated the state does in fact have a surplus of roughly $2 billion to $3 billion. His main concern is building a budget that is safe for the state in case an economic dip comes in the next few years.

The budget proposes that $1.1 billion go to car tax relief funding.

According to Youngkin’s plan, the funding will come entirely from the surplus and would pre-fund the dedicated tax relief plan for the first three years of the program. He explained that his goal is to implement a permanent, refundable income tax credit that would be determined based on income. For people who earn less than $50,000 a year, they would receive a credit of $150. For people who file jointly, making less than $100,000 a year, they would receive a credit of $300. Youngkin described its purpose as giving families some relief from the local car tax, which he described as “the most hated tax in America since the tax on tea.”

In addition to car tax relief, Youngkin proposed eliminating taxes on tips.

If this part of the budget makes it to the final vote and passes, Virginia would be the first state to take such a move. He claims the tax cut would save the state $70 million, while opponents say this is just an arbitrary number.

Overall, whether the car tax relief program or other parts of Youngkin’s proposed budget make it to the final state budget for the next two years remains undetermined. There are many steps left before the budget is solidified and many adjustments could occur along the way.