Virginia's New 1% Sales Tax Option: What School Leaders Need to Know
Across Virginia, school divisions are facing aging facilities, growing deferred maintenance needs, and increasing expectations for safe, modern learning environments. A newly available funding option may help them find the money they need to address those challenges.
During the 2026 Virginia General Assembly session, the Commonwealth expanded local authority for an additional 1% sales tax for school construction and renovation projects, subject to voter approval through a local referendum. The legislation became effective July 1, 2026.
For school leaders, this creates an important opportunity to evaluate facility needs, prioritize projects, and collaborate with city and county partners on educational facility improvements.
What Changed in 2026?
Previously, only a limited number of Virginia localities could utilize an additional sales tax for school construction following voter approval. The 2026 legislation expanded that authority statewide, allowing all counties and cities to consider an additional 1% local sales tax for school construction and renovation projects through a referendum. Funds may be used for eligible capital improvements, including construction, renovation, and certain financing costs.
While local governments ultimately determine whether to pursue a referendum, school divisions can now play a critical role in identifying facility needs and providing the first-hand insights needed to support informed community decision making.
Why This Matters
For many school divisions, facility needs exceed available annual capital budgets. Building system upgrades and other renovations often compete for limited funding, creating a growing backlog of deferred maintenance each year.
Delaying these investments can increase maintenance costs, create operational challenges, and make future improvements more expensive to implement. Aging school buildings also have a compounding negative impact on the students they serve. Studies continue to show that outdated infrastructure like inadequate lighting and poor ventilation reduce test scores and overall student engagement.
Maximizing Available Funding
The new sales tax option creates an opportunity to generate additional capital to address school infrastructure needs, but funding is only one piece of the puzzle. School divisions must also determine how to align project priorities, implementation strategies, procurement methods, and long-term facility goals to deliver projects in the most effective way possible.
Depending on a division's needs, any funding generated from the new sales tax option can be paired with a variety of delivery and implementation strategies, including design-build, performance contracting, and phased capital programs. These funds can also be strategically stacked with outside funding from grants, rebates, financing, and other sources.
The goal is not simply to fund projects, it’s to maximize the value of every dollar invested. With the right strategy, school divisions can create a roadmap to address facility modernization in a comprehensive way, accelerating the most critical improvements in the short term while enabling aspirational projects long-term.
Preparing for the Opportunity
As conversations begin at the local level, school divisions can take several steps now to position themselves for success.
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Review facility assessments, capital improvement plans, and deferred maintenance priorities.
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Identify projects that may be eligible for future funding opportunities.
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Develop preliminary project scopes, cost estimates, and implementation timelines.
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Coordinate early with city and county leaders regarding local priorities, timing, and referendum considerations.
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Prepare clear, factual materials that explain facility needs, project scope, and community impact.
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Evaluate funding and project delivery strategies that maximize available resources and accelerate implementation.
Whether a locality ultimately pursues a referendum or not, these activities can help school divisions build a stronger foundation for future capital planning decisions. The path forward will look different in every locality, but the planning imperative remains the same: define facility priorities, communicate needs clearly, and make the most of every available funding source.
Enabling modern, healthy school buildings for the long term
Virginia's new 1% sales tax option provides local communities with another tool to address school infrastructure needs. As local conversations continue, now is the time for school divisions to develop long-term plans that align facility needs with community goals. The most successful efforts will be grounded in clear data, transparent communication, and a well-defined vision for future school improvements.
Schneider Electric's Virginia Public Sector team works with school divisions across the Commonwealth to support facility planning, capital improvement strategies, funding evaluations, and project implementation. To learn more about funding and delivery options available to your division, connect with our team.
Contributors:
Abby Weigel, Business Development Manager - Contact
Kevin DeLeon, Business Development Manager - Contact