Virginia residents to see tax cuts under new tax law

By Shirleen Guerra

(The Center Square) – Virginians are projected to see an average federal tax cut of about $3,500 in 2026 under a new tax law.

The Tax Foundation estimates the law could also add more than 26,000 long-term jobs in the commonwealth. The savings will vary across the commonwealth. Richmond City residents are expected to see an average cut of $3,773, while Chesterfield taxpayers will save about $3,183.

Henrico is projected at $3,366, Hanover at $3,668 and Petersburg at $1,428, one of the lowest in Virginia.

Goochland residents are projected to save $7,359, one of the highest the report said.

Elsewhere in Virginia, Fairfax County residents are projected to save $5,699. Virginia Beach is expected at $3,518, Accomack County at $2,219 and Tazewell County at $2,446.

In the Shenandoah Valley, Rockingham County is projected at $2,795, while in Southwest Virginia, Buchanan County is closer to $2,162. Albemarle County, home to Charlottesville, comes in at $7,649.

The law makes permanent income tax cuts first passed in 2017 and adds new provisions, including deductions for tipped and overtime pay, an expanded child tax credit, and a larger standard deduction. It also locks in full deductions for certain business and research expenses.

The Tax Foundation notes the average cut across the commonwealth is expected to decline after 2026, dropping to about $3,307 in 2027, $3,250 in 2028, and $2,679 in 2029, before increasing again in 2034.

Across the Potomac, Maryland residents are expected to see smaller average cuts.

The statewide average is $3,177 compared to Virginia’s $3,553. Maryland is also projected to see fewer long-term jobs added, with the report estimating about 19,000.

Montgomery County residents are projected to save $4,589, Prince George’s County $1,706 and Allegany County $2,196. Baltimore City is projected at $2,374, while Howard County is $4,332.

Most households in the commonwealth will pay less in federal income taxes starting in 2026, although the size of the savings will depend on where they live and how they file.