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Henrico County Courthouse. (BizSense file)
In an effort to fill vacancies, which account for one-tenth of Henrico County’s existing office space, Henrico city officials recently announced a plan to encourage economic investment by exempting more businesses from paying business license taxes. Plans are being made to restart the practice.
The county will also double the exemption threshold for the so-called BPOL (Business, Professional, Occupational License) tax from its current $500,000 level this year, after increasing the exemption threshold in $100,000 increments over the past several years. We are considering this. 1,000,000.
The measure exempts a business’ first $1 million in gross receipts from the county’s BPOL tax rate of 20 cents per $100 and is included in the fiscal year 2025 budget proposal submitted to county supervisors Tuesday evening.
The increase will exempt an additional 1,300 businesses in the county, bringing the total number of businesses that do not pay BPOL taxes to 15,800, the county said. That represents about 83% of the county’s 19,000 businesses that are or will be subject to his BPOL tax.
Of the remaining businesses that continue to pay BPOL, 3,000 will see their BPOL taxes reduced as a result of the tax increase, said Brandon Hinton, Henrico County’s deputy administrative manager.
Brandon Hinton
Hinton said the increase will benefit more small businesses in the county, explaining that the majority of BPOL taxes come from large businesses such as big box stores and grocery stores.
“This really helps small businesses grow,” he said. “They don’t have to worry about having to pay hefty BPOL taxes and can focus on other areas.”
Anthony Romanello, Henrico’s economic development director, said the tax exemption expansion is another tool in the department’s toolkit to attract businesses to the county, including the county’s machinery, data centers and He explained that this is in addition to recent reductions in tax rates for biotechnology.
“This is going to help hundreds of businesses in the county and I think it’s going to be a really good differentiator for us as we continue down this path of working with the business community,” Romanello said.
“We have good data showing that reducing the tax burden on the business community increases investment and county revenue, and this increase in the BPOL threshold will have a similar effect. “There is good reason to believe that it will,” he said.
Since Henrico last raised the exemption in 2021, when the threshold increased from $400,000 to $500,000, BPOL’s tax revenue has increased by $12.5 million, or nearly 33%, in the past two fiscal years, Hinton said. he said.
Hinton said reaching the $500,000 mark was a goal the county set internally several years ago. The county began raising fees in 2017, when the threshold increased from $100,000 to $200,000.
Neighboring municipalities have implemented their own BPOL increases as well, with Chesterfield County catching up with Henrico last year with its own exemption amount of $500,000. The City of Richmond also increases the BPOL exemption amount to her $250,000 and allows eligible new businesses to pay a $30 annual fee for up to two years instead.
Henrico’s BPOL tax rate for most businesses is 20 cents per $100. Chesterfield is similar, but the city’s fees range from about 20 cents for retailers, wholesalers and contractors to 58 cents for businesses, professional services and financial services.
Romanello said the jump to the $1 million threshold will allow Henrico to remain competitive with its neighbors, in part because office space has become scarce in response to the pandemic-related trend toward remote work. He said this is an ongoing challenge facing the country. He said the county’s office vacancy rate is currently 11.3%, according to CoStar data.
Anthony Romanello
“In the last few years, every company around the world has been evaluating office space. Our company, commercial real estate owners, office building owners are evaluating space so they can make space decisions and make investment decisions. We want to ensure that we provide maximum flexibility as we continue to do so,” Romanello said.
“By moving the threshold from $500,000 to $1 million, we will pick up an additional 1,300 companies and lower BPOL taxes for 3,000 companies.We believe this is just one of Henrico’s differentiating factors. “There is,” he said.
The proposed $1.4 billion FY25 budget presented Tuesday maintains the current real estate tax rate of 85 cents per $100 of assessed value and is $1.25 billion, an increase of $97.6 million, or 8.4%, over the current budget. Includes the General Fund.
The proposal recommends a 4.8 percent pay increase for all eligible county employees and includes a total capital budget of $327 million, of which approximately $111 million will be raised in 2022. The allocation for projects approved in the bond referendum includes $120 million for water and wastewater infrastructure improvements and $30 million. For road and pedestrian projects.
Supervisors will review the budget plan in detail during a work session scheduled for next week. Public hearings on the budget, which the county must adopt before the fiscal year begins on July 1, are scheduled for March 26 at 5 p.m. and April 9 at 6 p.m. The full text of the budget can be viewed on the county’s website.
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