VA HB609

Changes Virginia's corporate income tax sourcing rules for sales other than tangible personal property from a "cost of performance" method to a "market-based" approach, effective for taxable years beginning on or after January 1, 2027.

Establishes a $100,000 aggregate sales threshold for taxpayers to be subject to Virginia corporate income tax on non-tangible sales, with sourcing based on where the taxpayer's market is located (where services are received, real property is located, or intangible property is used).

Allows telecommunications companies to elect to continue using the existing cost-of-performance sourcing method through January 1, 2033, as a transition provision.

Creates special sourcing rules for defense contractors, allowing them to estimate Virginia sales based on the Commonwealth's share of total U.S. population when the location of service benefit cannot reasonably be determined.

Eliminates special sourcing provisions previously granted to property information and analytics firms and Internet root infrastructure providers, moving these entities to the standard market-based sourcing rules beginning in 2027.