Hampton Roads cities say a state-mandated property tax break for disabled veterans has grown so large that it's straining local budgets, and regional leaders are now asking Virginia to help cover the cost. The region's planning commission made reimbursement for the exemption its top legislative priority heading into the next General Assembly session, following a meeting on October 7.
The exemption, which gives qualifying disabled veterans and certain surviving spouses a full exemption from local real estate taxes, began in 2011 after Virginia voters approved a constitutional amendment the year before with 82% support, according to The Virginian-Pilot. At the time, the newspaper reported an estimated 4,200 veterans statewide were eligible, and fewer than 600 Hampton Roads properties were enrolled that first year. Eligibility has since expanded to include veterans who died in the line of duty and certain surviving spouses, and the benefit can follow a surviving spouse if they move to a new home.
The numbers today look nothing like they did in 2011. Hampton Roads now has more than 30,000 tax-exempt homes under the program, and that figure is projected to top 34,000 next year, per the same Pilot report. Statewide, the cost of the exemption has ballooned from $8 million in 2011 to an estimated $416 million in 2026, according to the Virginia Association of Counties, and the group projects that figure could approach $600 million by 2028. The program is growing roughly 19% annually, the Pilot reported.
Hampton's $70 Million Question
Hampton has more than 2,700 properties receiving the real estate tax exemption and loses around $13.7 million in annual revenue as a result — about 8.2 cents on its tax rate, per the county association's figures. Over the life of the program, the city has foregone an estimated $70 million, according to the Pilot's reporting, money Hampton City Manager Mary Bunting said could have financed a $100 million bond for flood mitigation or school improvements, or alternatively lowered homeowners' real estate tax rate by 8 cents.
Virginia Beach, meanwhile, has more than 7,500 exempt properties and estimates it lost $44.6 million in revenue in fiscal year 2026, the Pilot reported. Bunting said Virginia has few eligibility guardrails in place, and that limiting the program's growth retroactively would be difficult. Her focus, she said, is getting the state to pay its fair share of the program's expense, which she said would give localities more flexibility to fund flood prevention or infrastructure work — and could reduce how often cities come asking Richmond for money on trails, roads and flooding.
Commission Director Calls Burden Unsustainable
Bob Crum, executive director of the Hampton Roads Planning District Commission, said the financial burden the exemption places on localities is becoming unsustainable. He was careful to note that no city leaders want to take the benefit away from local veterans — the push is about who pays for it, not whether it continues.
The commission's reimbursement push is one of four legislative priorities for the coming General Assembly session, alongside transportation funding, flood prevention funding and regional trail funding, but Crum's group has elevated veteran tax relief above the others. Bunting suggested the commission should rally around one major funding priority before Richmond rather than spreading its advocacy thin. Virginia Beach City Manager Patrick Duhaney said state delegates have already expressed concern about the cost of such requests ahead of their own reelections.
Why the Numbers Keep Climbing
Hampton Roads has one of the world's largest concentrations of active-duty military personnel and 15 military installations, with about 15% of its residents being veterans. The commission reports that the number of Hampton Roads residents with a 100% service-connected disability rating rose nearly 550% between 2015 and 2025, compared with a 275% increase nationally over the same decade.
Delegate Michael Feggans, a Democrat representing Virginia's 97th District who is himself a disabled veteran, has used the exemption on his Virginia Beach home for five years. He entered the military in August 2001, retired in 2021, and received his 100% service-connected disability rating that fall. Feggans believes much of the enrollment growth traces to service members who enlisted after the September 11, 2001 attacks now reaching retirement age. He told the Pilot he supports reimbursing localities for the program's cost but opposes placing new restrictions on who can receive the exemption.
A Related Program Offers a Possible Template
Virginia has faced a similar cost spiral before. A separate program providing tuition waivers and annual stipends to spouses and children of veterans killed or permanently disabled grew from $12 million in 2019 to an estimated $190 million by 2026. In 2024, lawmakers responded by appropriating $65 million annually for two years to help offset the cost for public universities — a potential model for how the state might eventually help absorb the property tax exemption's price tag.
Nationally, every state offers some form of disabled veterans tax relief, but the design varies widely. Some states impose long-term residency requirements or income thresholds, cap the assessed property value eligible for exemption, or limit the break to veterans with lower disability ratings than Virginia requires, according to AARP. Crucially, the county association notes that some states reimburse local governments for all or part of the revenue they lose to these exemptions — the exact arrangement Hampton Roads leaders are now asking Virginia to adopt.
The Virginia Department of Taxation is currently studying the costs and effects of the exemption on local governments through a workgroup that held its first meeting on September 16 and must submit a report by November 15. The Virginia Department of Veterans Services did not respond to questions about the program by deadline, the Pilot reported.
