Virginia Democrats have reportedly unveiled a slate of tax proposals that would dramatically raise income and investment taxes, setting the Commonwealth on a path to become the highest-taxed state in the country and eclipsing even California’s tax burden.
The legislation was introduced shortly after Democrats consolidated power in Richmond and includes the creation of new top income tax brackets along with expanded taxes on capital gains and other forms of investment income. If enacted, the proposals would drive Virginia’s top effective income tax rate to roughly 13.8 percent, higher than any other state in the nation.
Supporters of the plan argue the increases are necessary to fund public priorities and shore up state finances. Democratic Delegate Kelly Convirs-Fowler said the changes would require “millionaires [to] pay their fair share of taxes,” contending the additional revenue would help buffer Virginians from broader economic pressures. Progressive advocacy group The Commonwealth Institute, which has backed the proposals, claimed a so-called “Fair Share tax” could generate more than $1 billion annually for education, housing, and other public services.
Democrats have framed the tax package as part of a larger affordability agenda. Gov. Abigail Spanberger has said her administration will focus on lowering the cost of health care, housing, and energy, and campaigned on building what she described as an “Affordable Virginia.” Throughout her campaign, Spanberger emphasized cost relief, pledging that her policies would save Virginians money and make it easier for working families to get ahead. She later promised her administration would lower health care, energy, and housing costs in 2026.
Critics, however, argue the tax hikes directly contradict those promises. Virginia Republicans say raising taxes on income and investment will only make the state more expensive and undermine economic growth. State House Minority Leader Terry Kilgore described the proposals as the leading edge of a broader slate of what he called “bad bills” being pushed by the new Democratic majority.
The Republican Party of Virginia echoed those concerns, warning that Spanberger’s economic agenda would steer the Commonwealth down the same path as high-tax states like California and New York. Conservatives argue that those states have already driven businesses and residents away with aggressive taxation.
The backlash has spread beyond Richmond. Conservative policy organizations and Republican-aligned groups have warned that the proposals would place Virginia at a serious competitive disadvantage. Americans for Tax Reform President Grover Norquist said it is always a mistake to raise taxes, but especially dangerous at a time when states are competing to attract businesses and investment.
“It would be particularly foolish for Governor Spanberger and the Democrats who now control Richmond to do so at this time of heightened state tax competition,” Norquist said.
The Congressional Leadership Fund, a major organization aligned with House Republicans, also blasted the proposals, saying they would raise costs statewide, discourage investment, and push jobs and capital out of Virginia. The group warned that it is about to become far more expensive to live, work, and raise a family in the Commonwealth.
The CLF further accused Democrats of moving swiftly to raise taxes after campaigning on affordability, noting that within days of taking power, legislation was introduced creating new sales and retail taxes. The group said Democrats run on lowering costs but then turn to higher taxes once in office.
While the tax plan has not yet been formally adopted, Democrats’ 64-36 majority in the House of Delegates and 21-19 edge in the state Senate make passage likely. As Democrats defend the hikes as a “fair share” approach, critics warn the move could transform Virginia into a tax outlier and become a major political liability as voters head toward the 2026 midterm elections.
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