Virginia Goes Full California: New Taxes, Rent Controls, and Lawsuits Await

Paul Riverbank, 1/24/2026Virginia embraces sweeping progressive reforms: higher taxes, rent control, legal shake-ups, and retail cannabis.

Not even a month into the new session, the legislative engine is running hot. Proposed tax hikes seem to arrive in waves, each more ambitious—or alarming—than the last. Lawmakers introduced HB 378, a bill that, if it survives intact, will slap a 3.8% tax on net investment income beginning in 2027. That may not sound outlandish at first glance, but combined with the existing state income tax, Virginia’s upper rate could hit 9.55% for capital gains and other passive earnings. Factor in what’s already owed to the federal government, and the numbers start to sting, especially for high earners and those holding sizable portfolios.

There’s more on the docket. HB 900 stirs the pot with a plan to lift sales tax rates in so-called transportation districts, while also tacking on a new levy for every package delivered to your doorstep. Whether you’re ordering bulk groceries, a birthday gift, or even dinner from your favorite restaurant, the cost creeps upward—small on each transaction, perhaps, but significant in the aggregate. Supporters point to Minnesota’s similar model, touting transportation funding; critics worry it’s yet another hit during a time when families already feel stretched.

The momentum doesn’t stop there. Another measure, HB 919, would tack a fat 11% tax on every gun or box of ammunition sold. That’s more than sticker shock—it’s a clear statement of priorities. Then comes HB 978, a bill that would remove the time-honored sales tax exemptions on services like dry cleaning and landscaping. Previously, these were regarded as off-limits, a quiet nod to the average Virginian’s everyday routines.

Add the numbers up, and it’s easy to spot a thread: the cumulative effect looks less like targeted policy and more like an overhaul. Even some left-of-center analysts admit the scope recalls California’s aggressive approach, a fact not lost on the business community. Quiet conversations in Richmond are filled with anxiety—will companies, executives, and young professionals slip across the border into one of Virginia’s less-taxing neighbors?

Meanwhile, housing policy is making headlines of its own. Rent control, seldom embraced at the state level, has shot to the fore. The latest proposals would define rent increases above 3% per year as “gouging.” Some versions aim even lower. Proponents argue renters need protection from runaway prices, but the case is far from settled. In other cities, similar measures repeatedly led to shortages, deferred maintenance, and paradoxically, the very rent hikes these policies sought to prevent. That history echoes in present debates, though the new majority seems unfazed, pressing ahead in pursuit of stabilizing living costs.

Legal reform is next on the chopping block—specifically, Virginia’s unique limitations on class action lawsuits. For decades, plaintiffs’ attorneys were mostly hemmed in, unable to bring large-scale claims in state courts. Proposed legislation would change all that, making it easier for groups to sue businesses locally. The business lobby, unsurprisingly, isn't holding back its dismay. They warn that Virginia’s reputation for legal predictability is on the line.

And then there’s another pivot: a drive to hike the cap on appeal bonds in civil cases from $25 million to a jaw-dropping $200 million. As written, it would force companies to put up much larger amounts just to challenge major legal judgments. Critics see little upside, countering that only the wealthiest firms could weather such terms—everyone else might settle quickly rather than risk being wiped out, even in situations where they might otherwise win on appeal.

Amid these changes, one policy shift actually has some bipartisan traction. The state is finally moving to create a legal, regulated market for recreational cannabis. Despite legalization, Virginia has for years delayed opening the door to retail. Advocates—including the new governor, Abigail Spanberger—argue that the black market is filling the vacuum, risking both public health and public order. “Without a proper system, we’re leaving Virginians in the lurch,” said Senator Lashrecse Aird, one of the bill’s main backers. Others point to youth access, unclear product standards, and lost tax revenues as reasons the state can no longer stall.

Still, the elephant in the room remains the broader leftward lurch. It’s impossible not to draw comparisons—with no small dose of apprehension—to what’s happened in states like California or Illinois, where high taxes and heavier regulation set off a slow-motion exodus of residents and companies. Those who have made Virginia home for decades watch nervously, wondering whether a reputation for moderate, balanced governance is fading in real time.

One thing is certain: change in Richmond is unmistakable. Whether these broad and rapid shifts mark a new golden chapter or sow the seeds of backlash is for Virginians themselves to decide, ballot by ballot, session by session. As for the politicians, they face the enduring test of every policy experiment: living up to the daily realities, anxieties, and aspirations of the people they serve.

Virginia, long known for the careful steadiness of its politics, has entered a new and uncharted era. The recent elections swept Democrats into power across the board, and in the opening weeks of their tenure, the Capitol’s atmosphere has shifted: urgent, sometimes brash, and unmistakably bolder than in years past.Not even a month into the new session, the legislative engine is running hot. Proposed tax hikes seem to arrive in waves, each more ambitious—or alarming—than the last. Lawmakers introduced HB 378, a bill that, if it survives intact, will slap a 3.8% tax on net investment income beginning in 2027. That may not sound outlandish at first glance, but combined with the existing state income tax, Virginia’s upper rate could hit 9.55% for capital gains and other passive earnings. Factor in what’s already owed to the federal government, and the numbers start to sting, especially for high earners and those holding sizable portfolios.There’s more on the docket. HB 900 stirs the pot with a plan to lift sales tax rates in so-called transportation districts, while also tacking on a new levy for every package delivered to your doorstep. Whether you’re ordering bulk groceries, a birthday gift, or even dinner from your favorite restaurant, the cost creeps upward—small on each transaction, perhaps, but significant in the aggregate. Supporters point to Minnesota’s similar model, touting transportation funding; critics worry it’s yet another hit during a time when families already feel stretched.The momentum doesn’t stop there. Another measure, HB 919, would tack a fat 11% tax on every gun or box of ammunition sold. That’s more than sticker shock—it’s a clear statement of priorities. Then comes HB 978, a bill that would remove the time-honored sales tax exemptions on services like dry cleaning and landscaping. Previously, these were regarded as off-limits, a quiet nod to the average Virginian’s everyday routines.Add the numbers up, and it’s easy to spot a thread: the cumulative effect looks less like targeted policy and more like an overhaul. Even some left-of-center analysts admit the scope recalls California’s aggressive approach, a fact not lost on the business community. Quiet conversations in Richmond are filled with anxiety—will companies, executives, and young professionals slip across the border into one of Virginia’s less-taxing neighbors?Meanwhile, housing policy is making headlines of its own. Rent control, seldom embraced at the state level, has shot to the fore. The latest proposals would define rent increases above 3% per year as “gouging.” Some versions aim even lower. Proponents argue renters need protection from runaway prices, but the case is far from settled. In other cities, similar measures repeatedly led to shortages, deferred maintenance, and paradoxically, the very rent hikes these policies sought to prevent. That history echoes in present debates, though the new majority seems unfazed, pressing ahead in pursuit of stabilizing living costs.Legal reform is next on the chopping block—specifically, Virginia’s unique limitations on class action lawsuits. For decades, plaintiffs’ attorneys were mostly hemmed in, unable to bring large-scale claims in state courts. Proposed legislation would change all that, making it easier for groups to sue businesses locally. The business lobby, unsurprisingly, isn't holding back its dismay. They warn that Virginia’s reputation for legal predictability is on the line.And then there’s another pivot: a drive to hike the cap on appeal bonds in civil cases from $25 million to a jaw-dropping $200 million. As written, it would force companies to put up much larger amounts just to challenge major legal judgments. Critics see little upside, countering that only the wealthiest firms could weather such terms—everyone else might settle quickly rather than risk being wiped out, even in situations where they might otherwise win on appeal.Amid these changes, one policy shift actually has some bipartisan traction. The state is finally moving to create a legal, regulated market for recreational cannabis. Despite legalization, Virginia has for years delayed opening the door to retail. Advocates—including the new governor, Abigail Spanberger—argue that the black market is filling the vacuum, risking both public health and public order. “Without a proper system, we’re leaving Virginians in the lurch,” said Senator Lashrecse Aird, one of the bill’s main backers. Others point to youth access, unclear product standards, and lost tax revenues as reasons the state can no longer stall.Still, the elephant in the room remains the broader leftward lurch. It’s impossible not to draw comparisons—with no small dose of apprehension—to what’s happened in states like California or Illinois, where high taxes and heavier regulation set off a slow-motion exodus of residents and companies. Those who have made Virginia home for decades watch nervously, wondering whether a reputation for moderate, balanced governance is fading in real time.One thing is certain: change in Richmond is unmistakable. Whether these broad and rapid shifts mark a new golden chapter or sow the seeds of backlash is for Virginians themselves to decide, ballot by ballot, session by session. As for the politicians, they face the enduring test of every policy experiment: living up to the daily realities, anxieties, and aspirations of the people they serve.