As you may know, the federal “standard deduction” rose a ton last year, all the way to $24,000 for a married couple. If you have less than that in charitable donations, mortgage interest, etc. — which most people do — you’re better off taking the standard deduction than you would be itemizing. I’m a big fan of doing my own taxes so the companies that lobby lawmakers to make the process difficult don’t benefit, and I was glad to get back to that after a few years of using software thanks to my complicated situation involving two kids, a house, and some freelance income.
Slight problem No. 1: Virginia state law still requires you to use the same type of deduction, standard or itemized, on your state return that you used on the federal one.
Slight problem No. 2: Virginia’s standard deduction is just $6,000. This means that if you have between $6,000 and $24,000 in itemizable deductions, you might need to do both sets of taxes both ways to figure out which choice is better for your total tax liability. (The fact that contributions to 529 college plans are deductible at the state but not federal level further hikes the benefit of itemizing in Virginia relative to that of doing so federally.)
Slight problem No. 3: Virginia taxes are due May 1, so a lot of people — including one National Review deputy managing editor who is typing with unusual force right now — locked in their choice of deduction before even pulling up any of the Virginia-specific forms.
This is a catastrophe. Naturally, the state government was aware of the problem, which should have been clear to it at the end of 2017 when the federal law was signed, but did not manage to fix it on time. At the end of February they passed an “emergency” bill to increase the standard deduction going forward, but only to $9,000 — and to give out a one-time refund in the fall that, in effect, takes the higher taxes many of us are paying (sometimes by accident, because we did the federal return first and didn’t realize itemizing there would save us money here) and divvies up the lucre among taxpayers in general.
Republicans had wanted to let taxpayers itemize in Virginia even if they hadn’t federally, now that there is such a severe chasm between the two systems. Democrats were unhappy the final compromise wasn’t redistributive enough with the money the state is getting purely through a legal quirk.