Virginia Finally Has a Budget
Richmond Report • June 25, 2026
With only days remaining before Virginia’s authority to spend money expired, the General Assembly approved a bipartisan compromise budget on June 22. Governor Glenn Youngkin now has seven days to recommend amendments before the General Assembly reconvenes ahead of the June 30 deadline.
📌 Why Did It Take So Long?
Normally, House and Senate budget negotiators resolve differences during the regular legislative session in March. This year, negotiations extended into June because lawmakers faced major new spending pressures while debating the future of Virginia’s data center tax incentives.
Unlike the federal government, Virginia cannot borrow indefinitely. Every dollar spent must be matched by available revenue.
⚡ The Data Center Debate
Why was this controversial?
The Senate proposed immediately ending a long-standing sales tax exemption designed to attract data center investment. The House argued Virginia should honor commitments already made through 2035 while creating new policies that make the industry pay a greater share of its infrastructure costs.
What was the compromise?
- Create a new Data Center Energy Consumption Fee
- Protect residential electric customers
- Generate as much as $600 million annually
- Encourage energy efficiency instead of simply eliminating incentives
- Require more data collection on water, power, and environmental impacts
📈 Where Will the Money Go?
- Protect energy infrastructure
- Support electric grid improvements
- Fund public services
- Reduce pressure on residential ratepayers
🏫 Other Budget Highlights
Virginia’s refundable Earned Income Tax Credit remains at 20% through 2030.
Beginning in 2027, the standard deduction increases to:
- $9,200 (Individuals)
- $18,400 (Married Filing Jointly)
Communities may ask voters to approve a local sales tax of up to 1% dedicated exclusively to school modernization and construction.
🗳 Reader Poll
What do you think should be Virginia’s highest budget priority?
Looking Ahead
Delegate Simon says the compromise strikes a balance between protecting Virginia’s status as the nation’s leading technology hub while ensuring major energy users help cover the costs they create. He expects lawmakers to continue refining Virginia’s data center policies as additional studies are completed.
