Virginia House Bill HB332

Virginia 2022 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22
• Report Pass: 2/7/22
• Refer: 2/7/22

Caption

Income tax, state and corporate; credit for small businesses.

Impact

Starting from the taxable years of 2022, small businesses can claim this tax credit against their income tax liabilities, with a credit amount equal to up to $250,000 of their tax liability. The total credits available are capped at $75 million per year, reflecting a significant state investment in supporting local business growth. This approach is expected to provide considerable financial relief to small entities, allowing them to reinvest into their operations and potentially creating further job opportunities within the community.

Summary

House Bill 332 introduces a nonrefundable income tax credit specifically designed for small businesses in Virginia. The bill defines 'eligible small businesses' as those employing fewer than 50 employees and generating no more than $10 million in gross receipts during the taxable year. This credit is aimed at supporting the financial health of small businesses struggling under tax pressures, emphasizing the importance of such entities in the state's economic landscape.

Contention

Throughout discussions of the bill, there were notable points of contention regarding the fiscal implications of such a tax credit on the state budget. Critics raised concerns about the sustainability of the program, particularly if the demand for credits exceeded the allocated budget. Additionally, there was debate surrounding the definition of 'small business' and whether the criteria sufficiently covered a wide enough range of businesses needing support.

Additional_notes

The bill represents a response to the ongoing economic challenges faced by small businesses, furthering the dialogue about the role of state assistance in fostering a robust economic environment. The potential success or failure of this bill could set a precedent for future financial aid and tax relief measures regarding business operations in Virginia.