Virginia has a state income tax, and it applies to most residents and income sources

Virginia taxes your income at rates ranging from 2% to 5.75%, depending on your tax bracket. Unlike some states, Virginia does not exempt retirement income, Social Security, or military pensions from taxation — though a few narrow credits and deductions exist for specific situations. If you live in Virginia or earn income there, you will owe state tax unless you fall into one of the few categories with special treatment.

The state uses a progressive tax system, meaning higher income is taxed at higher rates. You file Virginia taxes on Form 760 (the Virginia Individual Income Tax Return) if you meet the filing threshold, which is generally the same as the federal threshold but can vary based on age and filing status.

Key Takeaways

  • Virginia's income tax rates run from 2% on the lowest bracket to 5.75% on the highest, applied to federal taxable income with some adjustments.
  • Retirement income, including Social Security, pensions, and distributions from retirement accounts, is subject to Virginia income tax with limited exceptions.
  • Military retirement pay and some federal employee pensions receive a partial exclusion, but the amount depends on your age and when you retired.
  • You file Virginia taxes on Form 760 if your income exceeds the state filing threshold, which is typically aligned with federal requirements.
  • Virginia offers a tax credit for taxes paid to other states, which prevents double taxation if you earned income in multiple states.

How Virginia's tax brackets work

Virginia applies its tax rates to your federal taxable income, with some state-specific adjustments. The brackets change each year, so the exact dollar amounts shift, but the structure stays the same: you pay 2% on the lowest portion of income, then 3%, 5%, and finally 5.75% on the highest bracket. You do not pay the top rate on all your income — only on the portion that falls into that bracket.

The state publishes updated brackets and standard deductions each January on the Virginia Department of Taxation website. If you use tax software or work with a preparer, these are usually built in automatically. The key point is that Virginia starts taxing you at a lower rate than the federal system, but the top rate (5.75%) is moderate compared to other states.

What happens to retirement income and pensions

Virginia taxes most retirement income the same way it taxes wages. Social Security benefits, distributions from IRAs and 401(k)s, and most pension income are all subject to Virginia state tax. This is different from some states that exempt Social Security or pension income entirely, so it matters if you are planning retirement and considering where to live.

The main exception is military retirement pay: if you retired from the U.S. military, you can exclude up to $12,000 of military retirement income per year (as of 2024; this amount adjusts annually). Federal employees who retired under the Civil Service Retirement System (CSRS) also receive a partial exclusion, but the rules are narrower and depend on your age at retirement. You claim these exclusions on Form 760 when you file.

If you receive a pension from a Virginia public employee system (such as the Virginia Retirement System), that income is taxable. Virginia does not carve out a blanket exemption for public pensions the way some states do.

Filing requirements and thresholds

You must file a Virginia return if your income exceeds the state filing threshold. For 2024, the threshold is generally $13,850 for single filers under 65, $17,450 for single filers 65 and older, and $27,700 for married filing jointly (these amounts adjust annually). If you are claimed as a dependent on someone else's return, the threshold is lower.

Even if you do not meet the threshold, you may want to file if you had Virginia taxes withheld from your paycheck or if you are due a refund. Filing Form 760 is the way to recover overpaid taxes or claim credits you are may have access to to.

Virginia accepts electronic filing through the state website or through tax software providers. If you file federal taxes electronically, you can usually file Virginia at the same time. The state important date is the same as the federal important date — typically April 15.

Tax credits that reduce what you owe

Virginia offers a credit for taxes paid to other states, which is important if you worked in multiple states or moved during the year. You calculate the credit on Form 760, Schedule CR, and it prevents you from paying tax on the same income twice. The credit is limited to the lesser of what you paid to the other state or what you would owe Virginia on that income.

The state also offers a limited credit for property taxes paid, though the income limits are strict and phase out quickly. A few other credits exist for specific situations — such as adoption expenses or contributions to a college savings plan — but they are narrow and explore to relatively few people. Check the Virginia Department of Taxation website or Form 760 instructions to see whether you may have access to for any of these.

Deductions available on your Virginia return

Virginia allows you to deduct contributions to a Virginia-sponsored 529 college savings plan (up to $25,000 per beneficiary per year for married filing jointly, or $12,500 for single filers). This is one of the few state-specific deductions that can meaningfully reduce your tax bill. You claim it on Form 760.

You can also deduct contributions to a traditional IRA or SEP-IRA, but only if you are not covered by an employer retirement plan — or if your income is below certain limits. These deductions are the same as the federal rules, so if you took the deduction on your federal return, you can take it on Virginia as well.

Virginia does not allow a deduction for state and local taxes (SALT) the way some states do. You use the federal standard deduction or itemize on your federal return, and Virginia follows that same choice.

What to do if you move to or from Virginia

If you move to Virginia during the year, you are a part-year resident and must file a Virginia return for the months you lived there. You report only the income you earned while a Virginia resident. Form 760 has a section for part-year residents where you calculate your tax based on the portion of the year you lived in the state.

If you move out of Virginia, you file a final part-year return for the months you lived there. If you move to a state with income tax, you will also file a return in that state for the portion of the year you lived there. The credit for taxes paid to other states helps prevent double taxation in this situation.

If you move to a state with no income tax (such as Florida or Texas), you will not owe tax to that state, but you still owe Virginia tax on income earned while you were a Virginia resident. Once you establish residency elsewhere, you stop owing Virginia tax on new income.

Frequently Asked Questions

Does Virginia tax Social Security benefits?

Yes. Virginia taxes Social Security benefits the same way the federal government does — based on your combined income (adjusted gross income plus nontaxable interest plus half of Social Security benefits). If your combined income exceeds certain thresholds, a portion of your benefits becomes taxable. There is no Virginia exemption for Social Security, even for retirees.

Can I deduct federal income tax paid from my Virginia return?

No. Virginia does not allow a deduction for federal income taxes paid. You can deduct state and local property taxes, but only up to $10,000 total per year (this is a federal limit, and Virginia follows it). Most people use the standard deduction instead of itemizing.

What if I work in Virginia but live in another state?

You owe Virginia income tax on the wages you earned in Virginia, even if you live elsewhere. You file a Virginia return for that income and claim a credit on your home state's return for taxes paid to Virginia. The credit prevents you from paying tax twice on the same income.

Is there a Virginia tax on capital gains?

No. Virginia does not have a separate capital gains tax. Long-term and short-term capital gains are taxed as ordinary income under the regular income tax brackets. This is different from some states that tax capital gains at a higher rate or separately.

Do I have to file if I am retired and only have Social Security income?

Only if your total income (including Social Security) exceeds the filing threshold for your age and filing status. If you are 65 or older and single, the threshold is $17,450 for 2024. If you are below that, you do not have to file — though you may want to if you had taxes withheld and are due a refund.