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

Yes, Virginia has a state income tax. Unlike seven other states, Virginia requires residents to file a state tax return and pay tax on income earned within the state. The tax applies to wages from employment, interest and dividends, capital gains, retirement account withdrawals, and business income. If you live in Virginia or work there, you will owe state income tax on that income unless you fall into a narrow exemption.

Virginia's income tax rates range from 2% to 5.75%, depending on your total income. The state uses a progressive system, meaning higher earners pay a higher percentage. Unlike federal income tax, Virginia does not adjust its tax brackets for inflation each year, so the same income thresholds apply year to year.

Key Takeaways

  • Virginia taxes income at rates between 2% and 5.75%, with the rate depending on how much total income you report.
  • You must file a Virginia tax return if you earned income in the state or lived there for any part of the tax year, even if you owe no tax.
  • Retirement income, including Social Security and pension distributions, may be partially or fully exempt depending on your age and income level.
  • If you work in Virginia but live in another state, you may owe Virginia tax on wages earned there, though your home state may offer a credit to avoid double taxation.

Virginia income tax brackets and rates for 2024

Virginia's tax brackets are fixed and do not change year to year. A single filer in 2024 pays 2% on the first $3,000 of taxable income, 3% on income between $3,001 and $5,000, 5% on income between $5,001 and $17,000, and 5.75% on income above $17,000. Married couples filing jointly have higher thresholds at each bracket, and the state offers separate brackets for heads of household and married filing separately.

The state does not index these brackets to inflation, which means the same dollar thresholds have applied for many years. This can result in bracket creep, where inflation pushes you into a higher tax bracket even though your real income has not increased. Virginia's General Assembly periodically votes to adjust the brackets, but this does not happen automatically.

Who must file a Virginia tax return

You must file a Virginia return if you lived in Virginia for any part of the tax year and had income above the filing threshold. The threshold depends on your filing status and age. A single person under 65 must file if they had more than $12,000 in income; a single person 65 or older must file if they had more than $13,000. Married couples filing jointly have higher thresholds: $24,000 if both are under 65, and $25,000 if at least one is 65 or older.

You must also file if you had Virginia income tax withheld from your paychecks, even if your total income falls below the threshold. This is because you may be owed a refund. If you worked in Virginia but lived in another state, you must file a Virginia return on the income you earned there, though you will also file in your home state.

Retirement income and Social Security exemptions

Virginia offers a partial exemption for retirement income that makes the state more favorable than many others for retirees. If you are 59½ or older, you can exclude up to $12,000 of retirement income per year from Virginia taxation. Retirement income includes distributions from IRAs, 401(k)s, pensions, and annuities, but not Social Security benefits.

Social Security benefits are not taxed by Virginia at all, regardless of your age or total income. This means if your only income is Social Security, you owe no Virginia state tax. If you receive both Social Security and other retirement income, you can exclude up to $12,000 of the non-Social Security income and pay tax only on the remainder.

The $12,000 exclusion is per person, not per household. If you are married and both receive retirement income, you can each exclude up to $12,000. You must be at least 59½ at the end of the tax year to claim the exclusion, and you must have lived in Virginia for the entire tax year.

Military pay and other income exclusions

Virginia excludes military retirement pay from state income tax entirely. If you retired from the U.S. Armed Forces and receive a military pension, that income is not subject to Virginia tax. This applies to all military retirees, regardless of age, and is one of the most generous military tax benefits among states that have income tax.

Virginia also excludes income earned by residents who work for the federal government, provided that income is already subject to federal taxation. Certain types of investment income, such as gains from the sale of Virginia property held for investment, may also receive preferential treatment under specific circumstances. The state does not tax income earned by nonresidents who do not live in Virginia, even if they own property or do business there.

How to file Virginia state income tax

You file Virginia income tax using Form 760, the Virginia Individual Income Tax Return. You can file by mail, electronically through the Virginia Department of Taxation website, or through a tax software provider that supports Virginia returns. The filing deadline is the same as the federal deadline, typically April 15 of the year following the tax year, though it shifts if April 15 falls on a weekend or holiday.

If you file electronically, you will receive a refund faster than if you mail a paper return. The Virginia Department of Taxation processes electronic returns within two to three weeks if you request direct deposit. If you file by mail, allow six to eight weeks for processing. You can check the status of your return on the Virginia Department of Taxation website using your Social Security number and the amount of your refund or payment.

Working in Virginia but living in another state

If you work in Virginia but live in another state, you must file a Virginia return on the income you earned there. Virginia taxes all income earned within the state, regardless of where you live. You will also file a return in your home state, which typically taxes all income earned by its residents, regardless of where the work took place.

To avoid paying tax twice on the same income, your home state usually offers a credit for taxes paid to other states. This credit is not automatic—you must claim it on your home state return. The credit is limited to the lesser of the tax you paid to Virginia or the tax your home state would have charged on that income. If Virginia's tax rate is higher than your home state's, you may still owe additional tax to your home state; if it is lower, you will not receive a refund of the difference.

Frequently Asked Questions

Does Virginia tax Social Security benefits?

No. Virginia does not tax Social Security benefits under any circumstances. If Social Security is your only income, you owe no Virginia state income tax. If you have other income in addition to Social Security, you pay tax only on the non-Social Security income.

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

No. Virginia does not allow a deduction for federal income tax paid. You calculate Virginia taxable income by starting with your federal adjusted gross income and then making Virginia-specific adjustments, but federal tax itself is not deductible.

What if I moved to Virginia partway through the year?

You must file a Virginia return if you lived in the state for any part of the tax year and had income above the filing threshold. You will also file a return in your previous state on income earned there before you moved. Each state taxes only the income earned while you were a resident.

Is there a Virginia earned income tax credit?

Yes. Virginia offers a state earned income tax credit for low-income working individuals and families. The credit is calculated as a percentage of the federal earned income tax credit and is claimed on your Virginia return. You must also be able to claim the federal credit to claim the Virginia credit.

Do I have to pay estimated taxes to Virginia?

Yes, if you expect to owe $150 or more in Virginia income tax and do not have enough tax withheld from paychecks or other income sources, you must make quarterly estimated tax payments. Payments are due April 15, June 15, September 15, and January 15. You can pay online through the Virginia Department of Taxation website.