The bill, up for debate next year, would offer state residents a tax deduction of up to $US8000 for deciding to send their remains into space, US media has reported.
State officials say it would be good for the economy.
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"I know there's a giggle factor, but it's time to get over that," J. Jack Kennedy, a board member of the Virginia Commercial Spaceflight Authority, told WTVR news.
"This is about business and job opportunities."
The goal is to boost visitors to the Mid-Atlantic Regional Spaceport at Wallops Island.
Mourners would eat at local restaurants, stay at hotels and visit attractions, said Donna Bozza, director of the Eastern Shore of Virginia Tourism Commission, according to WTVR's website.
"If you're spending that money to go to space, you're going to want your peeps to cheer you on," she said.
The space funeral industry is dominated by a Houston, Texas-based company called Celestis, which says it has launched 10 "memorial spaceflights".
Costs range from $US1000 to have one's remains launched into space and return to Earth, and $US10000 to have one's ashes sent to the Moon.
On offer beginning in 2014 is the "Voyager Service (which) launches your loved one on a voyage through deepest space, leaving the Earth-Moon system on a permanent celestial journey," the company website says.
The cost for a single-gram sample of one person's ashes would start at $12,500.
Famous individuals who have had their remains launched into space include writer and LSD advocate Timothy Leary, Star Trek creator Gene Roddenberry, James Doohan - also known as "Scotty" from Star Trek - and Mercury 7 astronaut Gordon Cooper.
