Virginia taxes your income at rates between 2% and 5.75%, depending on how much you earn

Virginia has a progressive income tax system, meaning the tax rate increases as your income increases. The state divides income into six tax brackets. If you earn $3,000 a year, you pay 2% on that income. If you earn $17,000 a year, you pay a higher percentage on the portion above certain thresholds. The exact amount you owe depends on which bracket your total income falls into.

Virginia taxes both wages and other income sources — including interest, dividends, capital gains, and self-employment income. If you work in Virginia but live in another state, or live in Virginia but work elsewhere, the rules about which state gets to tax you depend on where you actually earn the money and where you claim residency. Most people pay Virginia tax only on income earned within the state.

Key Takeaways

  • Virginia's income tax brackets range from 2% on the lowest incomes to 5.75% on incomes over $17,000, with rates adjusted annually for inflation.
  • You owe Virginia tax on wages, self-employment income, interest, dividends, and capital gains if you are a resident or earned the income in Virginia.
  • Virginia allows you to deduct the federal income tax you paid, which lowers the amount of Virginia tax you owe.
  • If your employer withholds too much tax from your paycheck, you file a return to get a refund; if too little is withheld, you owe the difference when you file.
  • The Virginia Department of Taxation administers the tax system and provides forms, instructions, and a phone line for questions about your specific situation.

The six Virginia income tax brackets and how they work

Virginia's tax brackets are adjusted each year to account for inflation. The brackets for the 2024 tax year are: 2% on income up to $3,000; 3% on income from $3,001 to $5,000; 5% on income from $5,001 to $17,000; and 5.75% on income over $17,000. These thresholds change annually, so the exact dollar amounts will differ for the 2025 tax year and beyond.

The way brackets work: if you earn $10,000, you do not pay 5% on all of it. You pay 2% on the first $3,000, then 3% on the next $2,000, then 5% on the remaining $5,000. This is called the marginal tax system. Your effective tax rate — the actual percentage of your total income that goes to taxes — is lower than the top bracket rate you fall into.

Virginia also taxes capital gains (profit from selling stocks or property) and long-term capital gains at the same rates as ordinary income. Some states offer preferential rates for long-term gains; Virginia does not. If you sell an investment at a profit, that gain is taxed as regular income in your top bracket.

The federal tax deduction and how it reduces what you owe Virginia

Virginia allows you to deduct the federal income tax you paid during the year from your Virginia taxable income. This is one of the largest deductions available to most taxpayers. If you paid $2,000 in federal income tax, you can subtract that $2,000 from your income before calculating your Virginia tax. This deduction significantly lowers your Virginia bill.

You claim this deduction on your Virginia return, not on your federal return. You will need to know how much federal tax was withheld from your paychecks or how much you paid in estimated federal taxes during the year. This figure appears on your W-2 form (if you are an employee) or on your federal tax return (if you are self-employed or made estimated payments).

The federal deduction is one reason Virginia's effective tax rate is lower than the top bracket rate suggests. A person in the 5.75% bracket who paid substantial federal tax may end up with an effective Virginia rate closer to 4% or 5%.

Who has to file a Virginia tax return

You must file a Virginia return if you are a resident and your income exceeds the filing threshold for your age and filing status. For 2024, a single person under 65 must file if their income is over $12,000; a married couple filing jointly must file if their combined income is over $24,000. These thresholds are adjusted annually and vary by age and filing status.

You must also file if Virginia income tax was withheld from your paychecks, even if your income is below the threshold. This is because you may be owed a refund. Additionally, if you are self-employed and your net earnings are $400 or more, you must file both a federal return and a Virginia return.

Non-residents who earned income in Virginia may also need to file, depending on the amount and type of income. If you worked in Virginia for part of the year or received Virginia-source income (such as rental income from Virginia property), contact the Virginia Department of Taxation or consult a tax professional to determine your filing requirement.

Tax withholding and what happens if too much or too little is withheld

When you work as an employee, your employer withholds Virginia income tax from each paycheck based on the W-4 form you complete. The withholding is an estimate meant to cover your annual tax liability. If your employer withholds the correct amount, you will owe nothing when you file your return. If too much is withheld, you receive a refund. If too little is withheld, you owe the difference.

You can adjust your withholding by submitting a new W-4 to your employer at any time. If you expect to owe money at tax time, you can increase your withholding so that more is taken from each paycheck. If you expect a large refund, you can decrease your withholding to take home more pay during the year. The Virginia Department of Taxation provides a withholding calculator on its website to help you estimate the correct amount.

Self-employed people and those with income not subject to withholding (such as interest or dividends) may need to make estimated tax payments to Virginia four times a year. These payments are due on April 15, June 15, September 15, and January 15. If you do not make estimated payments and owe more than $150 at tax time, you may owe a penalty in addition to the tax itself.

How to file your Virginia return and where to send it

Virginia offers three ways to file: by mail, electronically through the Virginia Department of Taxation website, or through a tax professional. Most people file electronically because it is faster and reduces errors. You can file for free using Virginia's e-file system if your income is below a certain threshold (which changes annually) or if you use IRS Free File software.

If you file by mail, send your completed return and any required documents to the Virginia Department of Taxation at the address listed in the tax form instructions. Paper returns typically take four to six weeks to process. If you file electronically, you usually receive a refund within two to three weeks if one is owed.

You will need your Social Security number, your W-2 forms (if you are an employee), records of any other income, documentation of deductions and credits you are claiming, and your federal tax return or a copy of the federal income tax you paid. Keep copies of everything you send for your records.

Credits and deductions that lower your Virginia tax bill

Beyond the federal tax deduction, Virginia offers several other credits and deductions. The child and dependent care credit helps offset the cost of childcare. The education credits reduce tax for people paying college tuition or student loan interest. The property tax credit is available to low-income residents and renters. The earned income credit (Virginia's version of the federal EITC) provides money back to low-income working people.

You may also deduct charitable contributions, mortgage interest, and certain medical expenses, though these deductions are less common than they once were because many people now use the standard deduction instead of itemizing. The standard deduction for Virginia is the same as the federal standard deduction, which varies by age and filing status.

To claim a credit or deduction, you must report it on your Virginia return. The tax form instructions list which forms and schedules you need to complete. If you are unsure whether you may have access to for a particular credit, the Virginia Department of Taxation website has detailed information about each one, or you can call their tax assistance line.

Frequently Asked Questions

Do I have to pay Virginia income tax if I work in Virginia but live in another state?

Yes, you owe Virginia tax on income you earned in Virginia, even if you live elsewhere. However, you may also owe tax to your home state on the same income. Most states have reciprocal agreements to prevent double taxation, but you should file returns in both states and claim a credit for taxes paid to Virginia on your home state return. Consult a tax professional if you work across state lines.

What if I move to Virginia partway through the year?

You are considered a Virginia resident for the entire year if you move to Virginia and establish residency before the end of the tax year. You must file a Virginia return and pay tax on all income you earned during the year, including income earned before you moved. If you move out of Virginia, you file as a non-resident and pay Virginia tax only on income earned while you were a resident.

Can I file my Virginia return before I file my federal return?

Yes, you can file your Virginia return before your federal return. However, you will need to know your federal tax liability or withholding to claim the federal tax deduction. If you estimate this amount incorrectly, you may need to file an amended Virginia return after you complete your federal return. Many people wait to file both at the same time to avoid this complication.

What happens if I do not file a Virginia tax return when I am supposed to?

If you owe tax and do not file, you will owe penalties and interest on the unpaid tax. The penalty starts at 5% of the unpaid tax and increases the longer you wait. Interest accrues daily. If you filed late but are owed a refund, there is no penalty, but you cannot claim the refund after three years have passed.

Where do I find my Virginia tax forms and instructions?

The Virginia Department of Taxation website provides all current tax forms, instructions, and publications. You can download them for free or request them by mail. The website also has a searchable database of tax questions and answers, a withholding calculator, and contact information for the tax assistance line if you have questions about your specific situation.