The Virginia Department of Taxation has updated its income tax withholding tables and formula to reflect the temporary increase to the standard deduction for single and married taxpayers. The updated withholding calculations apply to wages paid on and after July 1, 2025.

Increase in standard deduction

In May 2025, Virginia Governor Glenn Youngkin signed into law H.B. 1600, which effective January 1, 2025 through December 31, 2026, increases the standard deduction to $8,750 (previously $8,500) for single filers and $17,500 (previously $17,000) for married couples filing jointly.

Conformity with the Internal Revenue Code

H.B. 1600 also includes a budget provision that could prevent the state's adoption of federal legislation that excludes overtime pay and tips from income tax. Specifically, Virginia's tax code will not conform to any provision of the Internal Revenue Code enacted after January 1, 2025, but before January 1, 2027, if the cumulative projected impact of the conformity would increase or decrease Virginia's general fund revenues. The provision does not apply to federal tax extenders.

The US House and Senate are currently considering legislation that would allow taxpayers to claim a deduction for qualified overtime wages. (See Tax Alert 2025-1120.)

Ernst & Young LLP insights

Employers should consider notifying employees living and/or working in Virginia of the increase in the standard deduction and suggest they review their Form VA-4, Personal Exemption Worksheet.