Effective September 1, 2004, the Virginia state recordation tax will increase by 10 cents, raising the rate to $.25 per $100. Localities are allowed to automatically add on a local recordation tax that is up to one-third that of the state levy. The recordation fee is levied on both the purchase price and the mortgage amount (grantee and grantor taxes). The recordation tax was passed as part of the final budget compromise. REALTORS^® were successful in reducing the rate from the original proposal that would have increased the state levy by $.30, bringing the total tax to $.45. This is the first time the recordation tax rate has been raised since 1948.

The budget also increases the sales tax from 4.5% to 5% on goods, but reduces the sales tax on groceries from 4.5% to 2.5%. The cigarette tax was increased from 2.5 cents to 30 cents (over two years). A permanent freeze was placed on the car tax rollback.