Virginia’s finances are off to a strong start this fiscal year. The Commonwealth reported that general‑fund revenue is $394 million ahead of the budget forecast after just four months, a sign that the state’s tax policies are delivering for families and businesses.
Key revenue drivers
Finance Secretary Mark Sickles highlighted that October alone brought in $141 million more than expected. A newly enacted tax on data‑center energy use contributed $66.5 million, roughly half of the month’s growth compared with a year earlier. In total, the data‑center consumption tax has generated $91.4 million in its first four months, and officials project it will reach $600 million by June 30.
Corporate income taxes and individual income taxes paid outside payroll withholding were the biggest contributors to the surplus. Together they produced $328 million above forecast – about 83 percent of the excess revenue. Corporate receipts through October total $666.4 million, a 77.8 percent increase from the same period last year, with October alone seeing $90 million versus $8.3 million a year earlier.
Overall fiscal picture
General‑fund revenue rose 6.3 percent from October 2025 to $2.19 billion. Year‑to‑date collections stand at $10.47 billion, up 7.7 percent from the comparable period last year and 3.9 percent above the current budget’s projections. Sales and use tax collections grew 3.9 percent for the month and are up 7.4 percent for the fiscal year to date.
Not every source grew, however. Payroll withholding – the largest single revenue stream – fell 4.6 percent from a year earlier, a decline of about $72.8 million. Despite that dip, withholding remains 3.6 percent higher than the same period in the prior fiscal year. Net individual income tax revenue, which includes withholding and other payments after refunds, slipped 3 percent in October but is still up 4.4 percent for the year.
What officials are saying
“October revenues came in $141 million above forecast, and every major tax source except recordation is running ahead of expectations for the year. That’s a great place to be heading into the budget cycle,” Secretary Sickles said in a statement. He cautioned that corporate income taxes and non‑withholding payments can be volatile, but the strong collections justify a careful look at raising revenue projections for the next biennial budget.
Governor Abigail Spanberger, a Democrat, used the numbers to reiterate her criticism of federal economic policies that she says burden Virginians. “With the war in Iran and reckless policies out of Washington burdening Virginians, my focus continues to be on saving money for families and protecting the long‑term strength of our economy,” she said.
Historical context
Virginia entered October already $253.7 million ahead of forecast, and the state has consistently outperformed its projections at this point in the fiscal year for the past two cycles. Through October 2025, collections were up 5.5 percent from a year earlier and $497 million above forecast; in October 2024 the surplus was $403.3 million.
The previous fiscal year ended with a sizable surplus. Preliminary figures released in July showed general‑fund collections exceeding projections by $936.3 million after a 6.7 percent increase, largely driven by individual income and sales taxes. The two‑year state budget incorporated $585.5 million of that surplus into the starting balance for the current fiscal year.
Looking ahead
The administration plans to remain cautious as it prepares the 2027 budget, noting persistent inflation and the possibility of another Federal Reserve rate hike in December. Nonetheless, the early‑year revenue strength provides a solid foundation for funding the governor’s “Moving Virginia Forward” agenda, which includes proposals to forgive medical debt and address housing costs.
Virginia’s fiscal health remains a testament to prudent tax policy and the growing tech sector’s contribution through the data‑center tax. As the state moves toward the next budget cycle, officials and taxpayers alike can take confidence from the robust revenue performance to date.
Original reporting: Alexandria, VA News – WTOP News — read the source article.
