Dozens of bills that could have increased taxes for Virginians were introduced at the start of the 2026 General Assembly session. A handful of statewide measures survived the session cull and are headed to Gov. Abigail Spanberger’s desk.
Republicans have warned that the bills that were unsuccessful this year may show up in the biennium budget or in the legislative docket again for the 2027 General Assembly session. They’ve lambasted their colleagues across the aisle in press conferences for trumpeting “affordability” as a key talking point while Democratic members introduced new tax bills. Democratic lawmakers have long argued that tax increases are necessary to pay for infrastructure maintenance and social programs.
Behind the scenes, however, House Speaker Don Scott, D-Portsmouth, signaled that he did not intend to allow tax increases to pass in his chamber, according to Senate Majority Leader Scott Surovell, D-Fairfax County. The speaker’s office did not respond to a request to confirm that statement, but the House body killed or continued tax bill after tax bill passed by the Senate, including an effort to tax firearms ammunition.
Among the handful of bills that passed the General Assembly that do create new statewide taxes is an effort to legalize retail cannabis, which includes a 6% to 9.5% sales tax; a 25% tax on skill game revenue; and a 10% tax on fantasy gaming revenue. These taxes coincide with newly legal retail and gaming items — cannabis would be legal in Virginia for the first time, along with so-called skill games.
While fantasy sports betting has been legal in Virginia since 2016, the bill would create a tax to coincide with what other established sports betting businesses are paying in taxes.
Among other bills that Republicans have labeled as tax increases are efforts to create a paid family medical leave program, efforts to allow collective bargaining for state and local employees, and efforts to bring Virginia back into the Regional Greenhouse Gas Initiative. Democrats have argued that those efforts are not direct taxes but instead an insurance program, legislation to require employers to talk with employees and the reestablishment of a source of funding for flood mitigation and energy efficiency programs. At least two of those efforts have price tags attached to them.
“Some on the left would argue that these fees aren’t ‘taxes,’ but what would one call a mandated fee paid to the government that one cannot avoid? I would call that a tax,” said Nathan Pittman, spokesperson for the state Senate Republican caucus.
Democratic lawmakers have a different view.
“My conservative friends like to call everything under the sun a tax. They also probably see ghosts,” Surovell said.
The $1 billion budget question: Data center tax exemptions
Sen. Mark Obenshain, R-Rockingham County, warned that some of the tax bills that fell by the wayside during the 2026 General Assembly session may not be entirely dead — and that some could appear in the biennial budget.
“Many things wind up being introduced as bills during session and dying, and if you listen to committee meetings you undoubtedly heard people say, ‘We’re going to try to address that in the budget,’” the Rockingham County Republican said.
He pointed out the roughly $1 billion general fund gap between the House and Senate budget proposals. At the center of that gap is a proposal by the Senate to end the data center tax exemption early. That clause was absent from the House proposal. Democratic lawmakers control both chambers.
Proponents of the effort to end the exemptions early have said it would create nearly $1 billion in tax revenue, which could pay for child care programs and school construction and cover funding cuts to federal programs. Opponents of the effort have said that Virginia would no longer be able to compete with other states to attract more developers in the billion-dollar industry. The exemptions are currently scheduled to expire in 2035. The Senate proposal would end exemptions in 2027.
Obenshain, the Senate Republican caucus chair, said that if the effort to end the data center tax exemptions early isn’t successful, the budget conference committee would need to figure out another way to bridge the gulf between the two chambers’ proposals.
“They’re certainly going to be looking for creative ways to close that gap and it would not surprise me one bit to see one or more of those introduced taxes wind up in the budget that emerges from the conference committee,” he said, regarding tax bills that had been killed or continued during the session. “There’s no shortage of ideas that have been floated out there by the Democratic majority in the House and Senate.”
In the Senate Finance Committee, members worked to avoid adding tax increases into the chamber’s two-year spending bill. Instead, the body opted to end the tax exemption for data centers to pay for initiatives, said Sen. Jennifer Boysko, D-Fairfax County, who sits on the money committee.
The budget bill has not yet been finalized, as conference committee members work to smooth over differences between the two spending proposals.
According to a report by the Senate Finance Committee, the cannabis excise tax could bring in about $71 million in revenue over the biennium.
The cannabis legislation includes a 6% statewide tax, and localities can opt to add an additional tax of up to 3.5%. About 40% of the state tax revenue from the retail sale of cannabis would go toward pre-kindergarten programs for at-risk 3- and 4-year-olds, 30% would go to the Cannabis Equity Reinvestment Fund, 25% would go to the Department of Behavioral Health and Developmental Services for substance use disorder prevention and treatment programs, and 5% would go to public health programs.
The Joint Legislative Audit and Review Commission staff estimated that the fantasy gaming bill could bring in $1.25 million annually in general fund revenue and $66,000 annually in revenue for the Problem Gambling Treatment and Support Fund.
About 2.5% of the tax revenue from the fantasy gaming bill would go toward the gambling fund, while the remaining revenue would go into the state’s general fund.
The Department of Planning and Budget said that the estimated gaming tax revenue is unknown as of the 2026 session. Based on figures from a 2020 report, the department estimated that the tax revenue brought in by skill games could be upwards of $249 million.
About 15% of tax revenue from skill games would be distributed by the Department of Taxation to the locality where the game is operated, 6.5% would go to the department to cover administrative costs, 2.5% would go to the Problem Gambling Treatment and Support Fund, 1% would go to the Department of State Police to be used by the Office of the Gaming Enforcement Coordinator. The remaining 75% would go to the state’s general fund.
What is paid family medical leave?
Republicans have argued against bills to establish a paid family medical leave program in Virginia, calling the program a tax on employers and employees.
“Just like Social Security,” Del. Joe McNamara, R-Roanoke County, told his House colleagues on the chamber floor. “The only difference is the amount that comes out of your paychecks will be set by an unelected bureaucrat who can’t be voted out.”
Boysko, who patroned the Senate version of the bill, said the program more closely resembles an insurance program than a tax.
Under the program, an employee who had a “qualifying event” would receive 80% of their regular pay. Covered events would include having a baby, caring for themselves or family members through an illness like cancer and providing end-of-life care to family members.
“Your boss doesn’t have to pay for anything. They could use your salary that you’d normally be getting to have a temporary person come in,” Boysko said. “Most of the time, when people have these big events happen … the companies scramble, people give their own time off, leave, they sacrifice their vacation time to care for that individual because these are things that you can’t avoid.”
The Virginia Employment Commission would assess applications for employees seeking paid family medical leave to ensure that they qualify. Companies could opt to use their own insurance provider as long as the provider offers the same level of benefits as the state program.
“Over 50% of the population of Virginia does not have the ability to take up to 12 weeks off for a very big, serious change of life — whether it’s caring for a loved one at the end of their life, bringing a new baby home, caring for themselves when a devastating illness happens to themselves or family members. I believe that this is something that gives grace to people in the best and the worst times, and helps them to plan it in advance,” Boysko said.
The amount paid to fund the statewide insurance program would be split between employers and employees and would equal roughly 0.5% of their wage or salary, or roughly $5 per week for an employee making $50,000 annually.
Boysko, who has been working to implement paid family medical leave for eight years, argued that the program is an effort to alleviate some costs experienced by Virginians during the ongoing nationwide affordability crisis.
“We know that it’s a hard time for folks, but on paid family medical leave … less than $300 a year to take 12 weeks off when the worst or the best thing happens, to me you would easily recoup your money if you have one event that takes place,” she said. “This is something that I think is going to help families.”
The cost and benefit of reentering the Regional Greenhouse Gas Initiative
Virginia had entered into the Regional Greenhouse Gas Initiative, and was the first Southern state to do so, after a law passed by the Democratic-controlled General Assembly in 2020 required the commonwealth’s participation. The initiative is a multistate effort aimed at reducing carbon dioxide emissions from power plants. Eleven Eastern states, including Virginia, joined the program.
In 2022, Republican Gov. Glenn Youngkin issued an executive order to reevaluate Virginia’s participation in the program, with the intent of ending it. The State Air Pollution Control Board repealed Virginia’s participation in RGGI the next year. The program was not included in the 2024 budget, solidifying the commonwealth’s departure from the initiative.
Youngkin’s action to pull Virginia out of RGGI was found by a Floyd County circuit judge to be unlawful. Youngkin and Republican Attorney General Jason Miyares appealed the ruling, but those appeals were withdrawn after Spanberger and Attorney General Jay Jones, both Democrats, entered office.
Youngkin urged the General Assembly against rejoining RGGI in his final address to the body before leaving office in January. He called the program a “regressive tax that drives up the cost of living for all Virginians.”
The Democratic-controlled General Assembly passed bills to re-enter Virginia into the RGGI program in early March. Those bills are now on Spanberger’s desk, awaiting her signature, veto or amendment.
Should the legislation be enacted, Virginia’s participation in RGGI is forecast to increase ratepayers’ energy bills by about $2 to offset the cost of compliance for utility companies. The proceeds would go toward energy-efficiency and flood prevention programs, which Surovell said saves money in the long term.
“There’s a whole series of things like that the GOP likes to call ‘taxes,’” he said.
He added that a number of bills were passed aimed at reducing energy costs for Virginians as well. Those bills include one that would allow Virginians to generate their own electricity using small solar panel systems plugged in at home and an effort to standardize solar permitting that Surovell said could save between $6,000 to $8,000 per home on solar panel installation.
Would allowing public employees to collectively bargain increase costs?
A bill patroned by Surovell in the Senate and passed by the General Assembly would repeal a prohibition on collective bargaining for state and local employees. The bill creates a Public Employee Relations Board that would be tasked with determining appropriate bargaining units and administering elections for bargaining representatives of those employees.
Republican Del. Delores Oates of Warren County argued on the floor of the House that the board would take away the ability of local governments to decide what is best for their employees.
“This legislation replaces it with a suggested regulatory framework with a uniform statewide structure. That’s basically a mandate,” she said.
Republican Del. Mike Cherry of Colonial Heights said on the House floor that the localities he represents are looking at a roughly $200 million annual increase in employee costs, due to arbitration, should the legislation be enacted. He estimated that it could result in 30 cents to 40 cents added to the property tax rate.
“That is going to be unsustainable for us,” Cherry said.
The Commission on Local Government estimated that Chesterfield County, which Cherry represents, could see an increase in recurring personnel expenses of more than $197 million by fiscal year 2027. That estimate is based on a report by the U.S. Bureau of Labor Statistics that said the median weekly earnings of union workers are 20% more than those in similar nonunion roles. That 20% increase in salary for full-time employees across general government, schools and utilities in Chesterfield County would result in roughly $164 million in additional expenses and an additional $33 million in benefit expenses in 2027.
The town of Rocky Mount could see a recurring expense of $25,000 by 2028, according to the same report. That increase is tied to additional expenses for the town’s human resources department.
Surovell argued that the legislation does not demand or mandate any kind of increase in taxes and that it only requires state and local governments to talk to their employees.
“That’s it,” Surovell said. “The collective bargaining bill does not have mandatory binding arbitration like it does in most states, it does not allow for strikes like it does in most states, the only thing that it requires is for state and local governments to sit down with its employees and have conversations, that is the only thing the bill requires.”