Virginia Retirement Taxes

Virginia’s state income taxes apply to retirement income, but there may be some tax relief and savings you can qualify for.

This post is provided for general information only. Please confirm the details and circumstances of your unique situation with your tax accountant or other appropriate advisor before taking action.

What retirement income does Virginia tax?

Virginia makes most retirement income taxable. The general rule is that if you have to pay federal income taxes, you’ll owe state income tax as well.

Examples of taxable retirement income include:

  • Wages from part-time work

  • Profits from a gig economy job

  • Pension income

  • Military retirement income

  • 401(k), 403(b), and similar plans

  • Virginia retirement system plans

  • Tier 2 Railroad Retirement income

  • Traditional IRAs include SEP and SIMPLE IRAs

What retirement income does Virginia not tax?

There are several types of retirement income that Virginia normally doesn’t tax.

  • Social Security retirement benefits — even if you have to pay federal income taxes on your Social Security income, Virginia exempts Social Security benefits from state taxes.

  • Roth IRAs and Roth 401(k)s — since these accounts are post-tax with no deduction, your qualified distributions are generally tax-free.

  • Tier 1 Railroad Retirement income is treated the same as Social Security. Virginia generally won’t charge you state tax even if you owe federal-level taxes.

Income Tax Relief for Seniors Age 65 and Over

Virginia has an Age Deduction for seniors age 65 or older.

If you were born on or after January 1, 1939, both you and your spouse can subtract $12,000 each from your taxable Virginia income.

If you were born on or after January 2, 1939, both you and your spouse can subtract up to $12,000 each, depending on your income and filing status. If your Virginia adjusted gross income is more than $50,000 as a single filer or $75,000 as a married couple, your deduction is reduced by $1 for every $1 you’re over the income limit.

Property Tax Relief

Senior citizens may also qualify for a break on their property taxes. Property tax benefits are set at the city and county levels, so you’ll need to contact your local tax office for property tax information.

What is the income tax rate in Virginia?

The Virginia income tax rate tax brackets are:

  • 2%: $0 to $3,000

  • 3%: $3,000 to $5,000

  • 5%: $5,000 to $17,000

  • 5.75%: $17,000+

Remember, the tax brackets are based on your state taxable income after subtracting things like your Age Deduction and not including non-taxable income like Social Security benefits.

What is the sales tax rate in Virginia?

Virginia has a statewide 5.3% sales tax. Many cities and counties add an additional tax for a total sales tax of 6% or 7%.

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