New 2020 state tax laws
The start of the new year often brings new laws to the commonwealth, and this year is no exception. Area residents will want to take note of a few new tax laws that came into effect Jan. 1 according to Virginia Tax.
On its website tax.virginia.gov, Virginia Tax lists multiple changes to state taxes, the first of which is a reduced sale and use tax on essential personal hygiene products. Effective Jan. 1, the sales tax rate in the state on essential personal hygiene products will be reduced from the current 5.3% to 2.5%.
Products that will see a reduction in sales tax include disposable diapers (regardless of age of user), disposable incontinence pads, disposable bed sheets and feminine hygiene products like sanitary napkins/towels, menstrual cups and tampons.
Products that don’t qualify for the sales tax reduction, according to Virginia Tax, include but are not limited to reusable cloth diapers, reusable incontinence pads/undergarments and reusable bed sheets.
Virginians will also see a change to standard deduction of Virginia Individual Income Taxes. Virginia Tax cites that for the taxable year 2019, the standard deduction will increase to $4,500 for taxpayers filing single, or married filing separately. The standard deduction will likewise increase to $9,000 for married taxpayers filing jointly. Under previous legislation, the standard deduction was $3,000 for single individuals and $6,000 for married couples filing jointly.
In terms of changes to itemized deductions of Virginia Individual Income Taxes, for taxable years beginning on or after Jan. 1, 2019, taxpayers can deduct real and personal property taxes paid to Virginia or any other taxing jurisdiction up to $10,000, the annual limitation imposed by federal tax law. The overall limit on itemized deductions is known as the “Pease Limitation,” and during the 2019 General Assembly session, legislation was enacted that deconforms Virginia from the provision of the Tax Cuts and Jobs Act that suspends the Pease Limitation. For the taxable year 2018, Virginia conformed to the federal suspension of the limitation and did not impose a Virginia-specific Pease Limitation.
Virginia Tax warns that itemized deductions may be limited if a taxpayer’s federal adjusted gross income is greater than:
$271,700 if filing single
$326,050 if married filing jointly
$298,850 head of household
$163,025 married filing separately
Additionally, Virginians will see an extension of time to claim the Land Preservation Tax Credit. To receive credits for land or interest in land conveyed or transferred before Jan. 1, 2020, Virginia Tax states that you must apply by Dec. 31 of the third year following the recorded year of the donation. For land or interest in land conveyed or transferred on or after Jan. 1, 2020, you must apply by Dec. 31 of the second year following the recorded year of the donation.
New legislation also means that taxpayers will not be able to claim the Telework Expenses Tax Credit for any taxable year beginning on or after Jan. 1, 2019. This credit, according to Virginia Tax, was available to employers for eligible expenses incurred for allowing employees to telework under a signed telework agreement.
There is also a new requirement for the Provision of Preparer Tax Identification Numbers. If you are an income tax professional, for taxable years beginning or after Jan. 1, 2019, state law requires you to include your Preparer Tax Identification Number (PTIN) on any returns that you prepare.
More information on these tax law changes can be found at https://www.tax.virginia.gov/news/new-virginia-tax-laws-jan-1-2020.
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