Optimism among Northern Virginia business leaders is improving, although some expressed worries about taxes and the state’s approval of a paid family and medical leave program.
That’s according to the second-quarter 2026 Business Leader Survey released last week by the Northern Virginia Chamber of Commerce and public relations firm Pinkston, revealing the sentiments of the region’s CEOs, senior executives and business owners.
Since the last quarterly survey, business leaders have a more positive outlook on the regional economy. About three-quarters of surveyed leaders are optimistic about their company’s performance, up from 67% in 2026’s first quarter.
A major contributing factor was the result of the last General Assembly session.
“What our members saw was a lot of headlines around taxes, and we had a new governor, and there was just so much unstir,” Clayton Medford, the chamber’s senior vice president of government relations, told FFXnow. “This is only a year after DOGE was launched, and so it was just here we go again with all this. Then I think once we got through the veto session, we saw what Governor Spanberger prioritized. It gave everybody a little bit of a sigh of relief, like, ‘okay, this is a little bit more what we expected.'”
Chamber members were relieved to see several tax-related bills didn’t pass the Virginia General Assembly during its 2026 session, such as a sales tax expansion to various services and a corporate welfare tax.
The expansion of the sales tax to services was the top concern in the second quarter survey, with 27% of business leaders saying it would have a negative impact.
“We actually had a couple of the patrons of those bills come and speak to our members and had a great conversation about the need to look at taxation in a holistic way,” Medford said. “If we’re looking to raise taxes to fund certain services, let’s talk about how we can also generate more state revenue by allowing businesses to grow and attracting new businesses to the commonwealth. That’s a great way to grow the tax base as well, not just by adding new taxes.”
However, one item causing worry for businesses that did pass is paid family and medical leave. In the second-quarter survey, 19% of participating business leaders shared concerns about the impact of the program.
The leave program will begin taking shared employer and employee payroll contributions on April 1, 2028 and launch benefits on Dec. 1, 2028. Currently, the federal Family and Medical Leave Act allows employees to get up to 12 weeks of leave and maintain insurance for qualifying family or medical events, but it does not require pay during the leave.
State Sen. Jennifer Boysko (D-38), who represents part of Fairfax County, sponsored the paid family and medical leave bill after working eight years to get it passed. Boysko told FFXnow the new program will put Virginia on the same playing field as D.C. and Maryland, which have paid leave programs. She cited a study by Vanderbilt Peabody College that showed paid leave boosts labor force participation.
“It improves employee retention, and it contributes to an overall healthier workforce,” Boysko said. “And it actually is a benefit to employers. And the premiums are very very small … What our actuarial studies have indicated [is that the program] would be asking the employees and employers to contribute less than a percent of their wages.”
Companies can opt out of the state’s paid leave program if they have their own program that meets or exceeds the state benefits. Small businesses with 10 or less employees will not pay into the program, but its employees will still make their own payroll contributions, according to Boysko.
However, many of the Northern Virginia Chamber’s members are larger businesses that would be expected to participate in the program. For chamber members, the cost of the program and competitiveness were raised as issues.
“You want to be able to put your business in a position to compete for those employees through the better benefits package and the higher salaries and all that, but that should be left to the businesses to do and to compete for those employees,” Medford said. “We have a lot of employment opportunities in this region and a very strong talent pool, so that competition was happening already.”
Boysko says there will be state outreach to help businesses understand the program before it’s implemented in 2028, and she’s open to conversations with businesses about ways to improve the program.
“I never consider something a one-and-done,” Boysko said. “There are many times do I need to go back and tweak things, but we use the gold standard from other states, and I’m optimistic.”
The chamber also opposed the data center sales tax exemption that had caused a budget stalemate. The exemption was ultimately kept in the budget signed by Gov. Abigail Spanberger on June 29, but data centers face a new electricity consumption tax.
Medford says ending the exemption before the 2035 sunset date would hurt Virginia’s business-friendly reputation.
“That just sends a really chilling message to to the business community and to corporations, companies that are located outside of Virginia that may consider moving here,” Medford said. “If there’s an incentive on the table that goes for another 10 years, it may just be repealed, and so it sends a message that we’re not as business friendly as we actually are.”
While Virginia improved to third place this year in CNBC’s annual ranking of the best states for business, Medford said leaders need to address the cost of doing business. On the local level, he mentioned real estate and the local licensing taxes as cost drivers for chamber businesses.
The chamber is not concerned yet about new authority for localities to pursue an additional 1% sales tax through a voter referendum.
“I don’t think there’s enough time to really get it done, and there doesn’t seem to be much interest in doing it — at least from some localities like Fairfax right now — to get it done, to get it on the ballot for November,” Medford said.
There are some counties elsewhere in Virginia that have requested a sales tax referendum on the ballot this November, he acknowledged. Revenue from the tax would primarily be required to go to school construction, but Northern Virginia localities would also have the option to use the money to support transit.
“That may be something that becomes a big priority,” Medford added.
Local business leaders aren’t worried about Virginia’s minimum wage increases, as Northern Virginia pay rates tend to be higher than other parts of the state.
“Typically for our members, their direct employees are making more than the minimum wage across the board, and it gets into some industries where you’ve got subcontractors and short-time, part-time work that maybe gets down to closer to minimum wage,” Medford said. “For the most part, that’s not a huge cost driver for us, but it is something that we have to plan for.”
The chamber is looking ahead to the General Assembly’s next session as its policy committee meets this week to develop its legislative agenda.
