Budget Matters: How it Works and How It Can Work For Virginia Families

Originally published July 20, 2023; last updated Jan. 9, 2026

The state budget reflects what and who we value as a commonwealth because funding decisions impact the lives of everyone in Virginia through child care and education, health care, safety-net programs, and more. Creating broadly shared opportunity requires investing our resources in these building blocks of thriving communities — that’s why Virginia’s two-year budget and changes to that budget are among the most important decisions made each year during the legislative session.

Learn how Virginia’s budget process works

There are two sides to these important budget decisions: how we raise money and how we spend it.

When we all pitch in our fair share of taxes, we can invest in programs and services that help everyone thrive, no exceptions. But special interests and those at the top have rigged the rules to get out of paying what they owe, and Virginia’s tax code is upside-down, where those with the most pay the least taxes as a share of income. A more fair tax code can lift up families with low incomes and raise the shared resources we need to achieve our shared goals.

Learn the basics of Virginia tax policy

Lawmakers have recently made some progress to flip Virginia’s upside-down tax code.

In particular, the 2022 choice followed by an improvement in 2025 to give qualifying families greater access to their Earned Income Tax Credit (EITC) helps families with low incomes better make ends meet. And each legislative session provides lawmakers with more opportunities to advance tax choices that work for all of us.

Lawmakers must invest in our communities

Virginia’s financial position has been strong recently. Yet in response to “budget surpluses,” many elected officials often propose harmful tax cuts rather than investing in the many unmet needs of our communities. To protect current investments and open the door to the transformative investments our communities need, lawmakers will need to raise new sustainable resources, especially in light of federal decisions that put mounting pressure on state budgets. 

When it comes to making spending decisions, it’s important that lawmakers focus on what matters most for families and communities: targeted help for families struggling with increasing costs, investing in our schools, expanding health care access, and making sure profitable corporations and wealthy individuals pay their fair share.

Instead of more tax cuts each year that primarily benefit the wealthy and harm our ability to pay for critical services in the short and long term, lawmakers could:

• Expand access to high-quality child care by adding funding for an additional 10,300 children and investing in fair pay that retains high-quality early educators and keeps child care classrooms open: $681 million over the biennium 
• Provide more flexible funding to meet the needs of students facing the highest barriers, including students from low-income families, English language learners, and students with disabilities: $741 million over the biennium 
• Establish a Commonwealth Kids Credit to help nearly 800,000 children in Virginia: about $235 million a year
• Create a targeted ACA state subsidy program to replace expiring enhanced federal subsidies for low-income families (100% FPL – 200% FPL): $40.1 million in FY27
• Invest in the Affordable Housing Trust Fund

Understanding Virginia’s budget and tax policies and process isn’t just for lawmakers. By learning more and sharing with our neighbors, each of us can add our voice and make sure that the needs of our families and communities are at the center of these critical conversations.