General Overview
During the 2025 Session, the Virginia General Assembly enacted Item 257 (E) of the 2025 Appropriation Act (House Bill 1600, Chapter 725) requiring Virginia Tax to assess implementing market-based sourcing for non-tangible sales in the corporate income apportionment formula. Virginia Tax established a workgroup of stakeholders with the Secretary of Finance and the Chairs of the House Finance, House Appropriations, and Senate Finance and Appropriations Committees participating in selecting its members. This workgroup assessed:
- the administrative feasibility,
- the impact on major classifications of corporations operating in Virginia,
- the impact on corporate expansion within and into Virginia, and
- the projected impact on Virginia tax revenue as a result of adopting market-based sourcing.
Virginia Tax will present the workgroup’s recommendations to the Joint Subcommittee on Tax Policy and incorporate any feedback from the Joint Subcommittee prior to the submission of the final report. Virginia Tax will submit the final report to the Chairs of House Finance, House Appropriations, and Senate Finance and Appropriations Committees by November 15, 2025.