Virginia collects state income tax on wages, investment income, and retirement distributions

Yes, Virginia has a state income tax. Unlike a handful of states that rely entirely on sales tax or other revenue sources, Virginia taxes your income at rates that range from 2% to 5.75% depending on your tax bracket. The state treats income tax as its primary revenue source, so understanding how much you owe and what counts as taxable income matters for your annual tax filing.

Virginia's income tax applies to residents and part-year residents who earned money within the state. If you worked in Virginia but lived elsewhere, or moved to Virginia partway through the year, you may still owe Virginia tax on the income you earned while living there. The state uses a progressive tax system, meaning higher earners pay a higher percentage, but the rate increases only on the portion of income that falls into each bracket.

Key Takeaways

  • Virginia's state income tax rates run from 2% on the lowest bracket to 5.75% on the highest, applied to wages, pensions, interest, and dividends.
  • You file Virginia taxes using Form 760 if you owe state tax, and the deadline matches the federal deadline of April 15 unless you request an extension.
  • Virginia offers a standard deduction (amounts vary by filing status and age) and allows you to claim either the standard deduction or itemize deductions, just like federal taxes.
  • Retirement income including Social Security, pensions, and 401(k) withdrawals may be partially or fully exempt from Virginia tax depending on your age and income level.
  • If you moved to or from Virginia during the year, you file as a part-year resident and only pay tax on income earned while you lived in the state.

Virginia income tax brackets and rates for the current tax year

Virginia uses six tax brackets. The lowest bracket starts at 2% and applies to income up to a certain threshold; each higher bracket adds a percentage point or fraction thereof until you reach the top rate of 5.75%. The exact dollar amounts where each bracket begins change annually based on inflation adjustments, so the threshold for the 3% bracket this year differs from last year's threshold.

Your filing status — single, married filing jointly, married filing separately, or head of household — determines which bracket thresholds apply to you. A married couple filing jointly reaches higher income levels before entering the top bracket than a single filer does. The Virginia Department of Taxation publishes updated bracket tables each January; you can find them on the state tax website or ask a tax preparer for the current year's brackets.

Virginia does not tax capital gains at a different rate than ordinary income. Long-term capital gains, short-term capital gains, and wages all stack into your total taxable income and are taxed at your marginal rate. This differs from the federal system, where long-term capital gains receive preferential rates.

What income Virginia taxes and what it does not

Virginia taxes wages, salaries, tips, and self-employment income. It also taxes interest income, dividend income, and capital gains from the sale of stocks, real estate, or other property. Rental income, business income, and income from partnerships or S corporations all count as taxable income in Virginia.

Certain types of income receive partial or full exemptions. Social Security benefits are not taxed by Virginia. Military retirement pay earned by someone who was a member of the armed forces before January 1, 2020, is exempt; those who joined after that date do not receive this exemption. Pension income and distributions from 401(k)s, IRAs, and similar retirement accounts are taxable, though Virginia offers a retirement income deduction for residents age 59½ or older that can reduce or eliminate tax on some retirement income.

Interest from U.S. Treasury bonds and certain municipal bonds may be exempt depending on the bond type. Child support received is not taxable. Gifts and inheritances are not taxable income. Unemployment benefits are taxable in Virginia.

Filing requirements and deadlines

You must file a Virginia state tax return (Form 760) if your income exceeds the filing threshold for your age and filing status. The threshold varies: a single person under 65 with less than a certain amount of income may not be required to file, while someone over 65 has a higher threshold. If you have tax withheld from your paycheck and expect a refund, you can file even if you are not required to, which is often worth doing to recover overpaid tax.

The Virginia tax return deadline is April 15, the same as the federal deadline. If you file a federal extension (Form 4868), you automatically receive an extension for Virginia taxes as well, moving your deadline to October 15. Virginia does not grant extensions beyond the federal extension period.

You file your Virginia return after you file your federal return, since Virginia tax depends on your federal adjusted gross income as a starting point. Many tax software packages handle both returns in sequence. If you use a tax preparer, they will file both at the same time.

Deductions and credits available to Virginia taxpayers

Virginia allows you to claim either the standard deduction or itemize deductions, just as you do on your federal return. The standard deduction amount depends on your filing status and age; residents 65 and older receive a higher standard deduction. You cannot claim both the standard deduction and itemized deductions — you choose whichever results in a lower tax bill.

Virginia offers several tax credits that reduce your tax liability dollar-for-dollar. The Earned Income Tax Credit (EITC) is available to low- and moderate-income workers and is calculated based on your federal EITC; Virginia's credit is a percentage of your federal credit. A child and dependent care credit is available if you paid for care to allow you to work. Adoption expenses may may have access to for a credit. Education-related credits exist for certain tuition and education expenses.

Virginia also allows a retirement income deduction for residents age 59½ or older. The amount you can deduct from retirement income (pensions, 401(k) distributions, IRA withdrawals) phases out as your income rises, but the deduction can substantially reduce or eliminate tax on retirement income for many older residents.

Part-year residents and nonresidents who earned Virginia income

If you moved to Virginia partway through the year, you file as a part-year resident. You pay Virginia tax only on income you earned while living in the state; income earned before you moved to Virginia is not subject to Virginia tax (though you may owe tax to your previous state). You report your part-year resident status on Form 760 and calculate your Virginia tax on only the portion of income earned in Virginia.

If you lived outside Virginia all year but worked in Virginia, you file as a nonresident. Virginia taxes you on income you earned within the state. You may be able to claim a credit on your Virginia return for taxes you paid to another state, which prevents double taxation on the same income. The credit is limited to the lesser of what you paid to the other state or what you owe to Virginia on that income.

How to file your Virginia state tax return

You can file your Virginia return by mail, electronically through approved tax software, or through a tax preparer. The Virginia Department of Taxation does not operate its own filing portal; instead, it approves third-party software providers and tax professionals to file returns electronically on your behalf.

If you file by mail, you send Form 760 and any required schedules to the Virginia Department of Taxation at the address listed in the form instructions. Include a copy of your federal return or a summary of your federal information. Mail returns take longer to process than electronic returns, typically four to six weeks for a refund.

Electronic filing through approved software or a tax professional is faster. Refunds from e-filed returns typically arrive within two to three weeks if you choose direct deposit. You can track your Virginia refund status on the Department of Taxation website once your return has been processed.

Frequently Asked Questions

Do I have to pay Virginia income tax if I just moved there?

You pay Virginia tax only on income you earned after you moved to the state. If you moved partway through the year, you file as a part-year resident and report only the income earned while you lived in Virginia. Your previous state may also tax income you earned before you moved; check with that state's tax authority.

Is Social Security taxed in Virginia?

No. Virginia does not tax Social Security benefits, regardless of your income level or filing status. However, if you receive other income such as wages, pensions, or investment income, that income is taxable and may push you into a higher tax bracket.

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

You owe Virginia tax on the income you earned in Virginia. You file as a nonresident on Form 760 and report only Virginia-source income. You may claim a credit for taxes paid to your home state to avoid paying tax twice on the same money, though the credit is capped at your Virginia tax liability.

Can I deduct my federal taxes from my Virginia income tax?

No. Virginia does not allow you to deduct federal income taxes paid. You can only deduct state and local taxes (SALT) if you itemize deductions on your federal return, and that deduction appears on your federal return, not your Virginia return.

When do I get my Virginia tax refund?

If you file electronically and choose direct deposit, refunds typically arrive within two to three weeks of your return being processed. Paper refunds take longer. You can check the status of your refund on the Virginia Department of Taxation website using your Social Security number and refund amount.