Virginia taxes your wages, investment income, and retirement distributions

Yes, Virginia has a state income tax. The state taxes wages, interest, dividends, capital gains, and retirement income. If you work in Virginia or live there, you will owe Virginia income tax on most types of income, even if you also owe federal income tax. The tax rate varies based on your income level and filing status.

Virginia's income tax system is separate from the federal system. You file both a federal return (Form 1040) and a Virginia return (Form 760) if you are required to file. The state does not automatically take money from your paycheck — your employer withholds it based on the W-4 form you complete, but the amount withheld may not match what you actually owe when you file.

Key Takeaways

  • Virginia residents and anyone earning income in Virginia must file a state return if their income exceeds the filing threshold, which varies by age and filing status.
  • Virginia income tax rates range from 2% to 5.75% depending on your tax bracket, and you calculate state tax separately from federal tax.
  • Your employer withholds Virginia income tax from your paycheck, but you may owe more or receive a refund when you file your state return.
  • Certain types of income, such as Social Security benefits and some retirement distributions, may be partially or fully exempt from Virginia state tax.

Virginia income tax rates and tax brackets

Virginia uses a progressive tax system with six tax brackets. Your rate depends on your taxable income and filing status. The lowest rate is 2% on income up to a certain threshold, and the highest rate is 5.75% on income above a higher threshold. The exact dollar amounts for each bracket change each year, so you need to check the current year's brackets when you file.

For example, if you are single and your taxable income is $3,000, you pay 2% on that amount. If your taxable income is $50,000, you pay 2% on the first portion, then 3% on the next portion, then 5.75% on the highest portion — you do not pay 5.75% on all $50,000. This is how progressive tax systems work: you pay different rates on different slices of your income.

Virginia also allows you to claim a standard deduction or itemize deductions, similar to the federal system. Your standard deduction reduces your taxable income before you explore the tax rates. If you are over 65 or blind, Virginia offers an additional standard deduction amount.

Who must file a Virginia state return

You must file a Virginia return if you are a resident or part-year resident and your income exceeds the filing threshold. The threshold depends on your age, filing status, and type of income. A single person under 65 with less than a certain amount of income may not be required to file, but a single person over 65 has a higher threshold. Married couples filing jointly have a different threshold than married couples filing separately.

You must file even if you do not owe tax, if Virginia withheld money from your paycheck during the year. Filing allows you to claim a refund of the overpayment. If you are self-employed, you must file if your net self-employment income is $400 or more, regardless of your age or other income.

Nonresidents who earned income in Virginia may also need to file a Virginia return, even if they do not live there. This includes people who worked in Virginia for part of the year or received income from Virginia sources such as rental property or business income.

Income that Virginia does not tax

Virginia exempts certain types of income from state tax. Social Security benefits are not taxed by Virginia. Military retirement pay and some other federal retirement income may be partially exempt, depending on your age and the type of retirement plan. Distributions from certain retirement accounts, such as Roth IRAs, may be tax-free under specific conditions.

Interest from U.S. Treasury bonds and notes is exempt from Virginia tax, though it is still subject to federal tax. Some types of disability income and workers' compensation are also exempt. If you receive income from these sources, you do not include it on your Virginia return, but you may still need to file if your other income exceeds the threshold.

How withholding works and what to do if too much is withheld

Your employer withholds Virginia income tax from your paycheck based on the information you provide on Form W-4. The amount withheld is an estimate — it may be more or less than what you actually owe. If too much is withheld, you receive a refund when you file. If too little is withheld, you owe money when you file.

You can adjust your withholding by completing a new W-4 and giving it to your employer. If you expect to owe money at tax time, you can claim fewer allowances to increase the amount withheld. If you expect a large refund, you can claim more allowances to decrease the amount withheld and take home more pay during the year. You can change your W-4 at any time.

If you have multiple jobs, work part of the year, or have income that is not subject to withholding, your withholding may not be accurate. In these cases, you may need to make estimated tax payments to Virginia during the year, or you may owe a large amount when you file. The Virginia Department of Taxation website has a withholding calculator to help you estimate what you should have withheld.

Filing your Virginia return and where to send it

You file your Virginia return using Form 760 (Individual Income Tax Return) or Form 760PY (Individual Income Tax Return for Part-Year Residents). You can file by mail or electronically through Virginia's e-file system. Most tax software, such as TurboTax, TaxAct, and H&R Block, includes Virginia forms and can file electronically for you.

If you file by mail, send your return to the Virginia Department of Taxation at the address listed on the form. The important date to file is typically April 15, the same as the federal important date. If you cannot file by the important date, you can request an extension, but the extension only delays filing — it does not delay payment of taxes owed.

You must attach your federal return to your Virginia return if you file by mail. If you file electronically, you do not need to attach anything — the software handles the connection between your federal and state returns. Keep a copy of your filed return and all supporting documents for at least three years in case Virginia requests more information.

What happens if you move to or from Virginia during the year

If you move to Virginia during the year, you are a part-year resident. You file Form 760PY and report only the income you earned while living in Virginia. If you move out of Virginia during the year, you are also a part-year resident and report only the income earned while you lived there. You may also owe tax to the state you moved to, depending on that state's rules.

If you moved out of Virginia but still have income from Virginia sources — such as rental income, business income, or a pension from a Virginia employer — you may still owe Virginia tax on that income even though you are no longer a resident. Nonresidents file Form 760NR (Individual Income Tax Return for Nonresidents and Part-Year Residents) for this situation.

When you move, notify your employer of your address change so they can update your withholding if necessary. Your new state may have different tax rules, and your withholding may need to change to reflect your new tax situation.

Frequently Asked Questions

Can I claim a Virginia tax credit for taxes I paid to another state?

Yes, Virginia offers a credit for taxes paid to another state, but only if you are a resident and earned income in that other state. The credit is limited to the lesser of the tax you paid to the other state or the Virginia tax on that income. You claim this credit on Form 760 to avoid paying tax twice on the same income.

What if I did not have enough withheld and owe Virginia money?

You can pay the amount owed when you file your return. Virginia accepts payment by check, money order, electronic transfer, or credit card (though credit card payments include a processing fee). If you cannot pay the full amount, contact the Virginia Department of Taxation about a payment plan.

Do I need to file a Virginia return if I only have Social Security income?

No, Social Security is not taxed by Virginia, so you do not need to file a Virginia return based on Social Security alone. However, if you have other income that exceeds the filing threshold, you must file and report that income.

What is the important date to file my Virginia return?

The important date is typically April 15, the same as the federal important date. If April 15 falls on a weekend or holiday, the important date moves to the next business day. You can request an extension to file, but taxes owed are still due by April 15.

Where do I find my Virginia tax refund status?

You can check your refund status on the Virginia Department of Taxation website using your Social Security number and the amount of your refund. Refunds typically arrive within 4 to 6 weeks of filing, though electronic filing may result in faster processing.