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Virginia Gov. Glenn Youngkin has announced a budget proposal to exempt service tips from Virginia’s state income tax.
On Monday, Youngkin said that his proposal will return about $70 million to Virginians every year.
“By removing tips from taxable income, it will directly increase the take-home pay of hundreds of thousands of Virginians and give them more buying power, which in turn will improve financial stability, stimulate local economies, and honor the value of their hard work.”
The governor cited the Virginia Department of Taxation and the Virginia Employment Commission, which says that more than 250,000 Virginians within the food service, beauty, and hospitality industries could benefit from the proposed tax relief.
“To those hotel workers and people who get tips, you are going to be very happy, because when I get to office we are going to not charge taxes on tips, people making tips,” Trump told supporters in June in Nevada, the state with the highest concentration of tipped workers in the nation.
Trump has not yet specified whether tips would be exempt from just income taxes or from payroll tax as well.
Under Youngkin’s proposal, workers who earn tips can claim a deduction on their state tax return if the income is included in their federal adjusted gross income.