An Isle of Wight County-backed General Assembly bill that would have partially reimbursed localities for the tax exemptions they provide to disabled veterans and the surviving spouses of soldiers killed in action failed to advance out of a Senate committee.

In 2011, the General Assembly passed legislation allowing 100% tax relief on residences located on up to an acre of land and one vehicle to veterans identified by the Veterans Administration as having a service-connected disability, regardless of income. The median tax-exempted home was valued at just over $450,000 in 2024.

According to Commissioner of the Revenue Gerald Gwaltney, Isle of Wight is among the top five cities and counties in the state based on its percentage of tax-exempt veterans and surviving spouses. Gwaltney told county supervisors last year that just under 700 qualified for an average $3,400 in relief per person, amounting to $2.3 million in uncollected real estate taxes. Just over 700 veterans and surviving spouses also qualified for just over $600,000 in car tax relief, bringing the total exemptions to $2.9 million or roughly 4.5% of the county’s tax base.

It’s what county supervisors have come to refer to as an “unfunded mandate,” where the state authorizes a tax break or mandates a new program without providing additional money to compensate for the impact to the locality’s budget.

The number of people who qualify for the exemption will soon expand. More than 92% of Isle of Wight and Surry county residents, and Virginians statewide, voted in favor of a constitutional amendment last year that will extend the tax exemption to include spouses of veterans who die in the line of duty, but not necessarily in combat.

State Sen. Jeremy McPike, D-Prince William, sponsored Senate Bill 1312, which would have mandated that “high exemption” localities like Isle of Wight be reimbursed by the state for 50% of the exemption value multiplied by that locality’s effective real property tax rate from 2022. It would have defined “high exemption” as localities where at least 1% of the total real estate tax base was exempt from taxation. McPike’s bill was “passed by indefinitely” in a 7-6 vote by the Senate Finance and Appropriations Committee, meaning it won’t advance to the full Senate or the House of Delegates this year. 

“We were hopeful that there might be some relief, unfortunately this legislation did not make it out of the Senate,” Assistant County Administrator Don Robertson told the Board of Supervisors at a Feb. 6 update on pending legislation.

State Sens. Louise Lucas, D-Portsmouth, Creigh Deeds, D-Charlottesville, Adam Ebbin, D-Alexandria, Barbara Favola, D-Arlington, Scott Surovell, D-Fairfax, and Ghazala Hashmi, D-Richmond, each voted to table the bill over the objection of McPike and Sens. Ryan McDougle, R-Hanover, Mark Obenshain, R-Harrisonburg, Richard Stuart, R-Westmoreland, and Todd Pillion, R-Washington.

Separate from the state-mandated disabled veterans exemption, Isle of Wight voluntarily offers a real estate tax credit of up to $2,000 to county residents ages 65 and up or who are totally disabled, provided the homeowners’ gross combined income during the prior tax year doesn’t exceed $56,300.