Virginia House Bill HB352

Virginia 2022 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Income tax, state and corporate; business interest.

Impact

The impact of HB352 on Virginia state law is notable as it aligns state tax provisions with federal tax regulations, potentially simplifying tax compliance for businesses. By increasing the allowable deduction for business interest, the bill aims to reduce the tax burden on corporations, which supporters argue will promote business growth and investment in the state. Adjustments in corporate taxes can also influence economic scaling among businesses, especially small and medium-sized enterprises that often face cash flow challenges.

Summary

House Bill 352 concerns adjustments to state income tax laws, particularly focusing on corporate and business interest deductions. It proposes significant modifications to the amount of business interest that corporations can deduct from their income. Specifically, for taxable years beginning on or after January 1, 2022, the bill allows for a 50 percent deduction of business interest disallowed federally under §163(j) of the Internal Revenue Code, while earlier years permitted a 20 percent deduction.

Contention

Debate surrounding HB352 includes concerns that increasing corporate tax benefits may disproportionately favor larger corporations, leaving smaller entities vulnerable under a competitive tax burden. Critics argue that the emphasis on corporate tax deductions may divert necessary tax revenue from public resources, such as education and infrastructure, leading to potential long-term fiscal issues for the state. Advocates stress, however, that the benefits to businesses could stimulate job growth and enhance economic stability across Virginia.