Facing a nearly $300 million budget shortfall for the next fiscal year, Fairfax County leaders are mulling over the decision to move forward with plans to adopt a meals tax.
They’re still working on the details, but Virginia law allows jurisdictions to adopt a meals tax of up to 6%. The meals tax would apply to every meal sold from the county’s restaurants.
During Tuesday’s Board of Supervisors Budget Committee meeting, representatives from several county agencies pointed to surrounding Northern Virginia neighborhoods that use a meals tax to describe how the concept could work.
Supervisors are expected to vote on whether to advertise plans for the meals tax at next week’s full board meeting.
The proposed fiscal 2026 budget features almost $60 million in cuts to county agencies and proposes a 1.5-cent increase in the real estate tax. A possible food and beverage tax could “offset those proposed reductions or tax increases or fund other priorities,” said Phil Hagen, director of Fairfax County’s Department of Management and Budget.
The food and beverage tax would equal about 3.6% of fiscal 2026 revenue, Hagen said. The earliest it would go into effect is Jan. 1, 2026.
Prince William County, Arlington and the City of Alexandria all have meals taxes, and Loudoun County is one of the few others that doesn’t, according to county documents. But Fairfax County voters have rejected the idea twice.
The tax covers ready-to-eat meals and food sold at restaurants, in addition to drinks that might be served with that food. Restaurant meals and food from deli counters would be taxed, too.
Drinks sold alone would not be taxed, and items from vending machines are exempt by state law. Fountain drinks and coffee sold alone wouldn’t be taxed, but coffee purchased with a bakery item would be.
Food and drinks that churches, nursing homes or day care centers, among other places, sell wouldn’t be taxed because they’re exempt.
Each percent up to the amount allowed by state law generates about $35 million in gross revenue annually, Hagen said.
A household with an income between $100,000 to $150,000 would be taxed about $49, according to county projections.
Similarly, the county has to decide whether it wants to include a dealer discount with the tax.
“The dealer discount would allow restaurants to retain a small fraction of the tax collected in order to offset their administration expenses,” Hagen said.
Offering a dealer discount also incentivizes restaurants to remit the tax to the county on time, he said.
About one-third of the tax would be paid by nonresidents, Hagen said, “so a food and beverage tax would shift some of the overall tax burden from the county off of our residents and on to nonresidents.”
Mount Vernon District Supervisor Dan Storck said his priority is “ensuring that it’s fair and equitable and that businesses are competing on a level playing field.”
Chairman Jeff McKay, meanwhile, said the tax wouldn’t solve what he described as its annual problem — determining how much money is necessary to fund Fairfax County schools.
“This is far from solving that,” McKay said. “The solution lies in the implementation of the recommendations of the (Joint Legislative Audit and Review Commission) study.”
McKay said that study finds the school system is underfunded by the state by over $580 million.
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