Fairfax County will need to hire more than 20 new staff and spend about $2.8 million a year to administer a countywide meals tax, if one is authorized in the coming months.
Even with the additional expenses, overall revenue would far exceed the costs of administering the program, which would tax food and drinks served by restaurants and other food service establishments, staff told the Fairfax County Board of Supervisors at a budget policy committee meeting yesterday (Tuesday).
Hiring personnel and preparing in advance of the tax’s debut would permit Fairfax to be ready for the new tax and avoid the rollout challenges other localities faced, said Jay Doshi, director of the county’s Department of Tax Administration.
He pointed to the city of Richmond, whose rollout of a meals tax and subsequent collection efforts were anything but smooth.
“It was pretty bad,” Doshi said at the committee meeting. “It ran the gamut: staffing to systems to enforcement to a lack of communications.”
Doshi also pointed to a compliance rate among establishments that ranged from just 75% to 85% in some jurisdictions when they first implemented a meals tax. Boosting that figure will require intense information-sharing with affected businesses.
“There is a greater need [at the beginning] for high-touch service,” Doshi said.
Supervisors directed staff last year to evaluate the possibility of a meals tax and other possible revenue sources. In his proposed fiscal 2026 budget unveiled in February, County Executive Bryan Hill didn’t formally propose a meals tax, but said it should be looked at as an option.
The Board of Supervisors is expected to advertise the meals tax proposal, including a possible maximum rate, next Tuesday (March 18) for a public hearing in late April. While state law permits counties to impose a tax of up to 6% (on top of a 4.3% state sales tax), Fairfax officials appear to be zeroing in on a rate of 3% or 4%.
A final decision is likely to come May 6, when supervisors “mark up” the fiscal year 2026 budget in preparation for final approval later that month.
The new budget will take effect on July 1, but if enacted, the meals tax likely won’t be imposed until the start of 2026, giving both the county government and retailers time to gear up and address technology challenges.
A 3% meals tax would generate an estimated $48.1 million in net revenue for the county government for the period between January and June 2026. At 4%, it would be about $65.1 million.
Department of Budget Management Director Philip Hagen said he’s “reasonably confident” in those projections, but acknowledged there could be “some differences when the rubber hits the road.”
If the local area is impacted by a regional or national recession, dining out could be among the first areas local residents cut from their budgets, he said.
For a typical Fairfax County household with middle-income earnings, a 3% tax rate would add about $150 to the cost of purchasing meals and prepared food over the course of a year, county staff estimated.
Supervisors seemed comfortable with the level of staffing required both to administer and enforce the tax, and to assist commercial and retail outlets in understanding it.
“There’s some complexity here,” Hunter Mill District Supervisor Walter Alcorn said, while Providence District Supervisor Dalia Palchik cautioned that “our mom-and-pop stores are going to struggle the most with a change.”
Board Chairman Jeff McKay said he believed there was a consensus to at least advertise the proposal for consideration. If that transpires at the March 18 meeting, the public will have its chance to weigh in during a public hearing slated for April 22.
“We’re getting a lot of correspondence already,” McKay said.
Until state law was changed in 2021, Virginia required counties to conduct voter referendums to impose a meals tax.
Fairfax County voters twice rejected the proposal, most recently in 2016 by a 12-point margin (44% in favor, 56% opposed). An earlier 1992 referendum had an even slightly higher margin (42% in support, 58% opposed).
The 2016 referendum would’ve capped the tax rate at 4% and required that 70% of revenues be used to support Fairfax County Public Schools. The proposal now under consideration would funnel all revenue to the county’s General Fund, to be used as determined by the supervisors.
Springfield District Supervisor Pat Herrity, the board’s lone Republican and the most consistent skeptic of a meals tax, didn’t attend the March 11 committee meeting. But a few of the present supervisors had questions about whether such a tax was the best route.
“I still have some concerns,” said Franconia District’s Rodney Lusk, pointing to a disproportionate impact on lower-income residents, who often spend a larger percentage of their pay on dining out and purchasing prepared meals.
Mason District Supervisor Andres Jimenez said the county will need robust outreach for small business owners, especially those whose first language isn’t English, if the measure is adopted.
“We need to make sure we’re going to where they’re at,” he said.
Supporters of a meals tax say it would give the county a funding source to supplement real estate taxes — one that produces about one-third of its revenue from people who don’t live in the county.
With his proposed budget, Hill suggested a 1.5-cent increase in the real estate tax rate, which would bring in about $51 million in the coming fiscal year, about the same as a 3% meals tax if it was in place for the second half of the fiscal year.
Meals tax opponents point both to the cost for families and the potential impact on the restaurant and retail industry, and the Fairfax County voters’ past rejection.
With the exception of Loudoun County, nearly every other Northern Virginia jurisdiction imposes a meals tax, including Arlington, Alexandria and Prince William County. A Fairfax County meals tax wouldn’t apply to businesses in Fairfax City or the towns of Herndon, Vienna and Clifton, which also already have a tax.
Arlington, Fairfax City and Herndon are all considering increasing their meals tax rates as part of their new budgets.
