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

Virginia taxes income at the state level. If you live in Virginia or work there, you will owe state income tax on wages, self-employment income, interest, dividends, and other earnings. Virginia does not have a local income tax in addition to the state tax, but your city or county may have other taxes (like property tax or business license fees).

The state tax is separate from federal income tax. You will file both a federal return to the IRS and a Virginia return to the Virginia Department of Taxation. The two are not the same, and you cannot skip one because you filed the other.

Key Takeaways

  • Virginia taxes income at rates between 2% and 5.75%, depending on your total income for the year.
  • You must file a Virginia return if you earned income in the state, even if you owe no tax after deductions and credits.
  • Virginia allows you to deduct your federal income tax paid, which lowers your state taxable income.
  • If you work in Virginia but live in another state, you may owe Virginia tax on wages earned there, though your home state may give you a credit to avoid double taxation.

Virginia income tax rates and brackets

Virginia uses a progressive tax system with six tax brackets. Your rate depends on your filing status (single, married filing jointly, head of household, or married filing separately) and your total income. The rates range from 2% on the lowest income to 5.75% on the highest.

For the 2024 tax year, a single filer with income between $0 and $3,200 pays 2%. Income between $3,200 and $8,000 is taxed at 3%. The brackets continue to climb, with the top rate of 5.75% applying to income over $17,000 for single filers. Married couples filing jointly have higher income thresholds before each rate applies. The Virginia Department of Taxation publishes updated brackets each year on its website.

Your actual tax bill also depends on deductions and credits you can claim. Many people reduce their taxable income by deducting the federal income tax they paid, which can lower the amount of Virginia tax owed.

Who must file a Virginia tax return

You must file a Virginia return if you earned income in Virginia during the tax year, even if you do not owe any tax after accounting for deductions and credits. The income threshold for filing depends on your age, filing status, and type of income. Generally, if your gross income is above a certain level (which varies by year and status), you are required to file.

You must file even if you had no income but received a refund from federal withholding, because Virginia may have withheld tax from your paychecks. Filing allows you to claim that refund. If you are self-employed, you must file if your net self-employment income is $400 or more, regardless of other income.

Residents of Virginia must file on income earned anywhere in the world. Non-residents must file only on income earned within Virginia. If you moved to or from Virginia during the year, you may need to file as a part-year resident, which has its own rules.

Federal income tax deduction and other credits

Virginia allows you to deduct the amount of federal income tax you paid during the year. This is one of the largest deductions available and can significantly lower your Virginia taxable income. You claim this deduction on your Virginia return; it does not appear on your federal return.

Virginia also offers credits for child and dependent care expenses, education-related costs, and certain types of income. The Earned Income Tax Credit (EITC) is available to low-income workers and families. Some credits are refundable, meaning you can receive money back even if you owe no tax. Others reduce your tax bill to zero but do not produce a refund.

Working in Virginia but living elsewhere

If you live in another state but work in Virginia, you owe Virginia income tax on the wages you earn there. Virginia taxes income based on where the work is performed, not where you live. You will file a Virginia return as a non-resident and report only the income you earned in Virginia.

Your home state may also tax the same income. To prevent double taxation, most states offer a credit for taxes paid to other states. You claim this credit on your home state return. The amount of the credit is usually limited to the tax your home state would have charged on that income. You will need to file returns in both states and keep records of what you paid to each.

How to file your Virginia return

Virginia accepts returns filed by mail or electronically. You can file online through the Virginia Department of Taxation website using approved tax software, or you can download forms and mail them. The deadline is the same as the federal deadline, usually April 15, though it may shift if that date falls on a weekend or holiday.

If you cannot file by the deadline, you can request an extension from the IRS. Virginia will honor a federal extension automatically, giving you until October 15 to file. However, an extension to file is not an extension to pay; if you owe tax, it is due by April 15 even if you file later.

Many people use tax software or hire a tax preparer. If your income is simple (wages only, no investments or self-employment), free software options are available through the IRS Free File program, and Virginia participates in this program as well.

Frequently Asked Questions

Does Virginia tax retirement income or Social Security?

Virginia does not tax Social Security benefits. Retirement income from pensions and distributions from retirement accounts (like IRAs or 401(k)s) is taxable, though Virginia offers a deduction for certain types of retirement income if you meet age and income requirements. Military pensions receive special treatment under state law.

What if I moved to Virginia partway through the year?

You file as a part-year resident and report only the income you earned while living in Virginia. You will also file in your previous state for the months you lived there. Each state taxes only the income earned during the time you were a resident. Keep records of your move date and any income earned before and after.

Can I file jointly with my spouse if only one of us worked in Virginia?

Yes. If you are married, you can file jointly on your Virginia return even if only one spouse earned income in Virginia. Both spouses report their income, but only the income earned in Virginia is subject to Virginia tax. Non-resident spouses report income earned outside Virginia, which is not taxed by Virginia.

What happens if I do not file a Virginia return when I should have?

Virginia may assess penalties and interest on unpaid tax. The penalty for late filing is typically 10% of the unpaid tax, and interest accrues daily. If you discover you missed a year, you can file a late return. The Virginia Department of Taxation may contact you if they identify unreported income from your employer or other sources.

Is there a Virginia tax on capital gains?

Capital gains (profit from selling stocks, real estate, or other assets) are taxed as income in Virginia at your regular income tax rate. There is no separate capital gains tax. Long-term capital gains receive no special lower rate in Virginia, unlike the federal system.