The Fairfax County County Board of Supervisors is exploring its taxing options, including possible taxes on meals and event admissions, in the hopes of reducing its reliance on property taxes.
Supervisors discussed new revenue diversification proposals at Tuesday’s (Sept. 17) budget policy committee meeting after calling on County Executive Bryan Hill to identify ways to ease the tax burden on homeowners and fill reported shortfalls in state funding for public schools.
The recommendations include raising the transient occupancy (hotel) tax and introducing new taxes on meals, admissions and probate, which is imposed on the property of someone recently deceased.
If implemented at the maximum allowable rates, county staff estimate these measures could collectively generate up to $226 million in additional annual revenue — equivalent to a 7-cent decrease in the real estate tax rate.
While the proposals are on the table for the upcoming Fiscal Year 2026 budget process, staff emphasized that they will be subject to thorough review and public hearings before any final decisions are made.
“Staff would recommend that any action on these taxes be time to coincide with the deliberation and action on the annual budget,” Philip Hagan, director of Fairfax County’s Department of Management and Budget, said at the committee meeting. “That certainly would allow us to leverage the many existing channels that we have for public input during that time period, including things like the district town halls…as well as the budget public hearings.”
Meals tax
The most contentious proposal currently under consideration is a potential meals tax, which stands to bring in the most revenue among the proposed options.
Fairfax County voters previously rejected a tax of up to 4% in 2016 when state law required counties to get approval through a referendum.
However, in 2020, the Virginia General Assembly passed legislation, sponsored by local Delegate Vivian Watts, that allows counties to implement a meals tax of up to 6% without a referendum. It also prohibits counties from enacting the tax until at least six years after a referendum defeat.
Although Fairfax County became eligible to introduce the meals tax in 2022, officials held off on considering it due to the economic impacts of the COVID-19 pandemic.
Should the meals tax be applied at its maximum rate of 6%, it could yield approximately $33 million for each percentage point — a total of $198 million, according to county staff.
Officials noted that the meals tax wouldn’t apply to general grocery items, but would cover ready-to-eat foods sold at grocery stores, such as items from a hot bar.
One consideration around the meals tax is the potential for a “dealer discount” — a provision that would allow restaurants to up to 5% of the tax they collect on the county’s behalf. The discount would be used to offset their administrative costs that businesses incur from implementing the new tax.
According to staff, about a third of the $1.14 billion spent on meals in Fairfax County in 2022 was by non-residents, including commuters and tourists.
“That equals about $11 million in revenue from non-residents for each 1% on the meals tax rate,” Hagan said.
Hotel tax
The county is also considering a hike in the 4% transient occupancy tax it currently imposes on hotel stays. Generating about $25.6 million annually, the current rate includes 2% that can be used for general county purposes, while the other 2% must go specifically toward promoting tourism.
If the county increases the tax rate, the next 1% increase would also have to be dedicated to tourism-related promotion. However, if the rate exceeds 5%, the additional revenue wouldn’t be restricted, meaning the county would have full discretion over those additional funds.
“The county’s levy of 4% is equal to the City of Fairfax’s rate,” Hagan said. “Other jurisdictions in the Northern Virginia area have rates of 5% or more, and then the District of Columbia charges just under 16%, while Montgomery and Prince Georges County, Maryland charge 7%.”
Admissions tax
The county also has the option to bring in revenue by chargeing up to 10% on event ticket sales. Each 1% of the tax could raise about $800,000, adding up to $8 million if the maximum rate is approved.
The county may choose to set different rates for charitable and non-charitable events to offer flexibility in how the tax is applied. Under Virginia law, the tax can also be applied to school-sponsored events, entry to museums, botanical gardens and zoos, and admissions fees for participating in sporting events.
Probate tax
Additionally, the county is considering a probate tax on estates valued over $15,000. The local rate of 33 cents per $100 of estate value — one-third of the state’s rate of 10 cents — is estimated to bring in around $360,000 a year, per county staff.
Unlike the other options, the probate tax would have a relatively quick implementation timeline. Although a public hearing is still required, county staff told supervisors the necessary system changes could be made within about a month of a potential effective date of July 1, 2025.
Fairfax County’s outreach strategy
As part of their presentation to the Board of Supervisors, county staff laid out a public engagement plan to inform the community about the proposed new taxes.
Tony Castrilli, the county’s public affairs director, said the outreach plan will explain why the county is exploring new revenue sources and provide details on how the changes would be implemented. The plan is aimed at two key groups: residents and local businesses.
For residents, the focus will be on delivering clear, straightforward information. For businesses, the county will provide guidance on how the changes could affect their operations and the timeline for any adjustments.
The county plans to use various platforms, including a website hub, social media, TV programming, virtual meetings and in-person events. Castrilli says the idea is to keep messaging consistent across all channels.
“We recommend the proven communication strategy of ‘common message, many voices,’ as this will be a countywide effort,” he said. “The goal is to ensure everyone is sharing the same messaging and information.”
No definitive commitment yet by supervisors
Though most supervisors showed interest in evaluating the revenue options, none formally endorsed any specific ideas put forward by county staff.
Instead, their comments centered on the importance of the county effectively communicating with residents and businesses about the potential impact of the tax proposals.
“This board hasn’t made a decision yet,” Franconia District Supervisor Rodney Lusk said. “So, I hope people understand that this is an exercise for us to get more information and to really think about kind of what the impacts are to our residents.”
Board Chairman Jeff McKay emphasized that while the proposals could help reduce the tax burden on homeowners, the estimated $226 million in revenue would fund only a small portion of the county’s overall budget. He noted that elected officials will still need to explore other options to prevent a future budget shortfall.
“As an overall percent of our overall budget, [these proposals are] far from diversification when, in totality, we’re talking about somewhere between zero percent if we do nothing…up to maybe a maximum of 4% of our general fund revenue,” he said. “So, I think those are important contextual marks for us to have in the ground.”
