VirginiaHB9782026 Regular SessionHouse

Retail Sales and Use Tax; taxation on various services, includes digital personal property.

Sponsored By: Vivian E. Watts (Democratic)

In Committee

Summary

Taxation in the Commonwealth. Levies the retail sales and use tax on the following services: admissions; charges for recreation, fitness, or sports facilities; nonmedical personal services or counseling; dry cleaning and laundry services; companion animal care; residential home repair or maintenance, landscaping, or cleaning services when paid for directly by a resident or homeowner; vehicle and engine repair; repairs or alterations to tangible personal property; storage of tangible personal property; delivery or shipping services; travel, event, and aesthetic planning services; and digital services. Digital services are defined in the bill as the following: software application services, computer-related services, website hosting and design, data storage, and digital subscription services. The services taxed under the bill include any transaction for digital services where the purchaser or consumer of the service is a business but do not include any service otherwise exempt under law. The bill also imposes the retail sales and use tax on digital personal property, defined in the bill as a digital product delivered electronically that the purchaser owns or has the ability to continually access without having to pay an additional subscription or usage fee to the seller after paying the initial purchase price. Revenues generated by the taxes levied on services and digital personal property shall be allocated in the same manner as other sales and use taxes; however, revenues from the state portion of the sales and use tax that would be allocated to the general fund shall instead be allocated as follows: first, (i) revenue generated by the imposition of such tax on delivery services in the Northern Virginia Transportation District shall be distributed to the Washington Metropolitan Area Transit Authority and (ii) all other revenues generated by the imposition of such tax on delivery services shall be distributed to the Commonwealth Transportation Fund. Of the remaining revenues, (a) 60 percent shall be distributed to localities on the basis of school-age population and (b) 40 percent shall be distributed to localities on the basis of the high-need student population in the locality. The bill clarifies that a high-need student population includes students who are (1) automatically certified for free school meals because of participation in social services programs, (2) participants in a program of special education, or (3) English language learners. The bill provides certain exemptions to the sales and use tax on services, including health care services that must be performed by a person licensed or certified by the Department of Health Professions, veterinary services, professional services, internet access services, and services provided by a person who does not receive more than $2,500 per year in gross receipts for performance of such services. The bill exempts services purchased by a nonprofit organization and services purchased by a homeowners' association or by a landlord for the benefit of his tenant. The bill also repeals the service exemptions currently provided for the sale of custom programs and modification of prewritten programs. Finally, the bill exempts food purchased for human consumption and essential personal hygiene products from all state, local, and regional sales taxes on and after July 1, 2026. Under current law, food purchased for human consumption and essential personal hygiene products are subject only to the one percent local option sales tax.

Subcommittee #3

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Bill Overview

No Economic Impacts Identified for this Bill

Sponsors & Cosponsors

Sponsor

  • Vivian E. Watts

    Democratic • House

Cosponsors

There are no cosponsors for this bill.

Roll Call Votes

All Roll Calls

Yes: 0 • No: 0

House vote 2/11/2026

Continued to 2027 in Finance (Voice Vote)

Yes: 0 • No: 0

House vote 2/9/2026

Subcommittee recommends continuing to 2027 (Voice Vote)

Yes: 0 • No: 0

Actions Timeline

  1. Continued to 2027 in Finance (Voice Vote)

    2/11/2026House
  2. Subcommittee recommends continuing to 2027 (Voice Vote)

    2/9/2026House
  3. House subcommittee offered

    2/8/2026House
  4. Fiscal Impact statement From TAX (2/7/2026 7:11 pm)

    2/7/2026House
  5. Assigned HFIN sub: Subcommittee #3

    2/5/2026House
  6. Referred to Committee on Finance

    1/13/2026House
  7. Prefiled and ordered printed; Offered 01-14-2026 26104398D

    1/13/2026House

Bill Text

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