Virginia employees are to have less state taxes withheld from pay because of withholding formula changes that became effective July 1.
The updated formula, which has not been announced by the state, now includes an increase in the annual state tax standard deduction to $4,500, up from $3,000, starting with tax year 2019. The standard deduction change was passed in Virginia’s 2019 I.R.C. conformity bill (H.B. 2529), which was signed Feb. 15 by Gov. Ralph Northam (D). The change in the formula was discovered by Bloomberg Tax Sept. 6.
The new withholding methods are effective July 1, even though they apply to the entire tax year for 2019 and later, a spokeswoman for the department told Bloomberg Tax Sept. 9. Employers should be using the new methods, but withholding before July 1 does not need to be adjusted, the spokeswoman said.
Not using the new withholding formula would result in more state tax being withheld from employees because of the new formula’s increased standard deduction, according to Bloomberg Tax analysts.
The other components of the formula, including the tax rates and brackets, did not change.
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