Tax laws change regularly, and keeping up with those changes is an important part of making informed financial decisions. For Virginia taxpayers, several new laws passed during the 2026 General Assembly session could affect individuals, families, educators, and businesses.

Some changes apply to the 2026 tax year, while others take effect later or create new options at the local level. Understanding what has changed now gives taxpayers more time to prepare instead of discovering the impact when it is time to file a return.

The Virginia Department of Taxation’s overview of the new Virginia tax laws provides information about legislation enacted during the 2026 General Assembly session. Here are several of the changes Virginia taxpayers should have on their radar.

Virginia’s Standard Deduction Remains the Same for 2026

One of the most important updates for individual taxpayers involves Virginia’s standard deduction.

For Tax Year 2026, Virginia’s standard deduction remains:

• $8,750 for single filers

• $17,500 for married couples filing jointly

However, another change is coming. Beginning with Tax Year 2027, Virginia’s standard deduction is scheduled to increase.

The standard deduction reduces the amount of income subject to state income tax for taxpayers who choose it rather than itemizing deductions. While the 2026 amounts remain unchanged, knowing what is coming in 2027 can be useful when considering your longer-term tax strategy.

Tax decisions should not begin when you sit down to file your return. Year-round tax planning can help you understand how changes in income, deductions, business activity, investments, and other financial decisions may affect your overall tax position.

Virginia Reinstated the Eligible Educator Expense Deduction

Virginia has also reinstated an eligible educator expense deduction beginning with Tax Year 2026.

Qualified taxpayers will be able to deduct up to $500 in eligible educator expenses on their Virginia return.

For teachers and other qualifying educators who regularly spend their own money on classroom-related expenses, keeping accurate records throughout the year will be important. Receipts and documentation can make it easier to determine which expenses qualify when it is time to prepare a return.

This is also a good example of why taxpayers should review tax changes each year. Credits, deductions, thresholds, and eligibility requirements can change, and overlooking a new provision could mean overlooking a tax benefit for which you qualify.

Working with a professional for tax preparation can help ensure your return reflects the current rules and the deductions and credits applicable to your individual situation.

Some Virginia Localities Can Consider an Additional 1% Sales Tax

Another significant change gives Virginia localities the option to impose an additional 1% local sales tax, provided the increase is approved through a local referendum.

According to Virginia Tax, revenue from the additional tax must generally be used for school construction or renovation. Certain localities may also be permitted to use the revenue for public transportation.

The additional 1% does not apply to food purchased for home consumption or essential personal hygiene products, which remain subject to Virginia’s reduced 1% statewide tax rate.

Because this is a local option rather than an automatic statewide increase, its impact will depend on where a taxpayer or business is located and whether voters approve an increase.

For businesses operating in an affected locality, a sales tax change can also create operational considerations. Businesses may need to make sure their point-of-sale systems, bookkeeping processes, pricing assumptions, and financial forecasts reflect the appropriate tax rate.

Virginia Established an Innocent Spouse Relief Process

Virginia has also established a process for certain taxpayers seeking relief from tax liability associated with a joint return.

Effective July 1, qualifying taxpayers who believe a spouse or former spouse should be responsible for some or all of a Virginia tax liability from a jointly filed return may apply for relief through Virginia Tax’s Offer in Compromise Doubtful Liability process. Applicants must meet the applicable qualifications for relief under federal tax law.

Tax situations involving joint returns can become complicated, particularly when finances or circumstances change after a return has been filed. Anyone who believes this provision could apply to their situation should review the requirements carefully and consider professional tax guidance before taking action.

Why These Tax Changes Matter for Virginia Business Owners

Not every law passed in 2026 will directly change a small business owner’s tax bill. But tax legislation is a reminder that your tax strategy should evolve along with your business and the laws that affect it.

As your revenue, expenses, payroll, investments, and business structure change, your tax situation may change with them.

That is why tax planning and business financial planning work best together.

For example, decisions involving equipment purchases, hiring, owner compensation, business expenses, retirement contributions, and growth investments can have financial and tax consequences. Waiting until tax season means many of those decisions have already been made.

K.G. Tax & Accounting Solutions discusses this proactive approach in "A Simple Guide to Tax Planning for Solopreneurs and Small Businesses." Instead of treating taxes as a once-a-year obligation, business owners can build tax planning into their ongoing financial strategy.

Look Beyond This Year’s Tax Return

Tax planning is only one piece of the financial picture.

A business can have growing revenue and still struggle with cash flow. It can generate a profit while lacking the reserves needed for upcoming expenses or taxes. It can also make a major investment that looks affordable today but creates financial pressure several months from now.

Understanding those relationships is why financial forecasting becomes increasingly important as a business grows.

In "Financial Forecasting for Small Businesses," we explain how forecasting can help owners estimate how future decisions may affect revenue, expenses, and cash flow.

Business owners can use forecasting alongside tax planning to ask better questions:

• How could projected growth affect our tax obligations?

• Are we setting aside enough cash for taxes?

• How will a major purchase affect cash flow?

• What happens financially if revenue is higher or lower than expected?

• Should we adjust our budget before making a major investment?

• Are our financial and tax strategies working toward the same goals?

The objective is not simply to prepare for the next tax deadline. It is to make better financial decisions throughout the year.

When Does a Business Need More Strategic Financial Guidance?

As a business becomes more complex, owners may need more than basic accounting and tax preparation.

A fractional CFO and financial planning service can help connect financial reporting, cash flow management, budgeting, forecasting, profitability, and strategic tax positioning.

As we explain in "What Is a Fractional CFO? A Guide for Growing Business Owners," accounting generally helps you understand what has already happened financially, while CFO-level planning helps you use that information to decide what should happen next.

That distinction becomes especially important when tax laws or economic conditions change. Instead of reacting after the fact, business owners can evaluate how changes fit into a broader financial strategy.

Prepare for Virginia Tax Changes Before Tax Season

Virginia’s 2026 tax law changes will not affect every taxpayer in the same way. Your filing status, income, profession, business activity, location, deductions, and other factors all play a role in determining what applies to you.

The important thing is not to wait until the filing deadline to start asking questions.

Reviewing your financial position before year-end gives you an opportunity to identify changes, organize documentation, evaluate your tax strategy, and make informed financial decisions while there is still time to act.

K.G. Tax & Accounting Solutions provides tax preparation, year-round tax planning, and strategic financial guidance for individuals and business owners. Whether you need help understanding how current tax rules apply to you or want to build a more proactive financial strategy for your business, our team can help you prepare for what comes next.

Tax laws change. Your financial strategy should be prepared to change with them. Contact K.G. Tax & Accounting Solutions to start planning for your 2026 taxes and beyond.

This article is for general informational purposes and does not constitute individualized tax or legal advice. Tax rules and their application depend on individual circumstances.