Grocery tax cut takes effect in Virginia on New Year's day

RICHMOND, Va. (WRIC) — Virginia is cutting taxes on groceries and some personal hygiene products in the new year.

The new law taking effect Jan. 1, 2023, ends the state’s 1.5% sales tax on groceries. That’s $1.50 in savings for every $100 spent.

“I have found that everything is more expensive in the grocery stores. It doesn’t matter which one you go to,” said Jacqueline Mitchell, who was out shopping on Friday. “Any relief is welcome.”

The cut doesn’t completely eliminate taxes on groceries in Virginia. Localities are still able to levy a 1% tax on the check-out line.

Governor Glenn Youngkin pushed for a complete repeal when he took office but his new package of tax relief proposal doesn’t touch on the grocery tax.

Asked why he isn’t trying to get rid of the rest during the 2023 session, Youngkin said he is shifting his focus to cutting income tax rates for people and corporations.

“We had an extremely successful tax package that was approved and I signed last summer — a $4 billion dollar tax cut package that delivered a great amount of relief for Virginians — but we have more to do. The big step for us is to begin to reduce rates and this is how we’re going to compete with our neighboring states that have been on this path,” Youngkin told reporters after unveiling his budget proposal to the General Assembly.

One Republican lawmaker, Del. Joe McNamara (R-Roanoke), said he will “probably” introduce a bill to remove the remaining grocery tax and reimburse localities for the lost revenue using $250 million in state dollars each year.

“I think the Governor prioritized the best opportunities for the Commonwealth and I support those completely but I think there may be opportunities for some additional relief if revenues allow it,” McNamara said. 

It may be a tough sell in the Democrat-controlled state Senate, where past proposals to end the local portion of the grocery tax were shot down.

Sen. Scott Surovell (D-Fairfax) said the money would be better spent on underfunded services like schools.

“I think we have done enough tinkering with tax cuts in the last session and, especially with a recession staring us in the face, we need to stop raiding the General Fund for political reasons,” Surovell said.

According to the Virginia Department of Taxation, most staple grocery items and cold-prepared foods qualify for the reduced sales tax rate.

Items that don’t qualify for the reduced rate include:

  • alcoholic beverages
  • tobacco
  • prepared hot foods packaged for immediate consumption on or off premises
  • seeds and plants used to grow food for home consumption

Essential personal hygiene products that qualify for the reduced tax rate include:

  • diapers
  • disposable undergarments
  • pads designed to protect undergarments
  • bed sheets
  • pads designed to protect bed sheets and mattresses
  • incontinence products designed to be inserted in the body
  • sanitary napkins
  • sanitary towels
  • tampons
  • menstrual sponges
  • menstrual cloths and pads
  • menstrual cups
  • pantyliners
  • period panties
  • other products used to absorb or contain menstrual flow