(The Center Square) – Virginia ended fiscal year 2026 with a preliminary $936.3 million General Fund surplus after tax collections exceeded expectations.
Preliminary accounting shows revenues grew $2.09 billion, or 6.7%, during the fiscal year, leaving the commonwealth with a surplus of nearly $1 billion above forecast.
Secretary of Finance Mark Sickles said payroll withholding taxes generated most of the year’s revenue growth, while higher-than-expected nonwithholding income tax payments and fewer tax refund liabilities accounted for roughly two-thirds of the surplus.
“Payroll withholding drove most of the growth,” Sickles said in a statement released by the governor’s office. “Additional gains came from higher non-withholding payments and fewer refund liabilities.”
He cautioned that the latter two revenue sources are highly volatile and said the General Assembly and the Spanberger administration intentionally took a conservative approach when writing the budget.
“We are committed to continuing to exercise caution with respect to these revenue streams to keep Virginia’s balance sheet healthy and resilient amid uncertain national economic conditions,” Sickles said.
Payroll withholding collections totaled $18.63 billion, exceeding projections by $183.4 million and increasing $1.07 billion, or 6.1%, from the previous fiscal year. The report said wage growth remained strong even though Virginia experienced a net loss of about 50,000 jobs during fiscal year 2026.
Nonwithholding income tax collections totaled $8.03 billion, surpassing projections by $347 million. The report attributed much of the increase to stock market gains, noting those revenues are closely tied to equity prices.
Sales and use tax collections reached $5.12 billion, exceeding the forecast by $157.2 million and rising 6.5% from the previous fiscal year. The report said higher wages, continued consumer spending and savings accumulated during the pandemic contributed to stronger-than-expected sales tax revenue.
Individual income tax refunds totaled $2.94 billion, about $286 million below forecast, while corporate income tax collections finished slightly below projections but remained above fiscal year 2025 levels.
The figures are preliminary pending final year-end accounting. Final fiscal year 2026 revenue totals are expected next month.
