Does Virginia Tax Social Security and Retirement Income?

Virginia does not tax Social Security

Virginia law exempts Social Security benefits and Tier 1 railroad retirement benefits from income tax at every income level. Any amount that was taxable on the federal return is entered as a subtraction on Form 760, line 5, and comes out before Virginia adjusted gross income is calculated. (Virginia Tax: Subtractions)

Social Security also stays out of the income test for the age deduction. That test uses adjusted federal AGI, which is federal AGI minus the taxable Social Security and Tier 1 benefits it contains. A larger benefit therefore never reduces the age deduction, though the pension, IRA and investment income that make benefits taxable federally do count. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

The federal government is a separate matter. Up to 85% of a benefit can be taxed on a federal return once other income passes fixed thresholds, wherever you live. Our taxable Social Security calculator shows how much of yours is counted.

Pensions are taxable; military retirees can subtract up to $40,000

Virginia has no pension exclusion. Private-employer pensions, Virginia Retirement System benefits, pensions from other states and federal civil service annuities (CSRS and FERS) are all included in Virginia income in the amount taxed federally. The only relief for these retirees is the general age deduction described below. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

Military retirement income is treated more favorably. For taxable year 2025 and later, up to $40,000 of military benefits can be subtracted, with no age requirement. Military benefits include retirement income for service in the U.S. Armed Forces and Survivor Benefit Plan payments to a surviving spouse. When both spouses on a joint return receive qualifying benefits, each can subtract up to $40,000 of their own. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

Income covered by the military subtraction cannot also be used for another subtraction, deduction, credit or exemption. A narrow separate subtraction exists for retirement distributions whose contributions were taxed by another state even though they were deductible federally; it mainly affects people who worked in a few states with that rule. (Virginia Tax: Subtractions)

IRA and 401(k) withdrawals and Roth conversions are fully taxable

Virginia starts from federal adjusted gross income, so taxable distributions from traditional IRAs, 401(k), 403(b) and 457 plans flow straight into Virginia income. No exclusion is tied to retirement accounts. For a household with more than $17,000 of taxable income, each additional dollar withdrawn is taxed at 5.75%. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

A Roth conversion is taxed the same way. The converted amount is part of federal AGI, Virginia has no subtraction for it, and the age deduction does not shelter it in any special way. Qualified Roth withdrawals are excluded from federal AGI and so never appear on the Virginia return, and they do not count toward the age deduction income test. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

To size a conversion against federal brackets and Medicare surcharges, see the Roth conversion calculator; for required withdrawals, the RMD calculator.

Interest, dividends and capital gains are taxed as ordinary income

Virginia has no lower rate for long-term capital gains or qualified dividends. They are taxed on the same schedule as pension income, which for most retirees means 5.75%. The federal exclusion of gain on the sale of a principal residence carries through because Virginia starts from federal AGI. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

Interest on U.S. Treasury obligations is subtracted from Virginia income. Interest on bonds issued by other states and their localities, exempt on the federal return, is added back; interest on Virginia state and local bonds stays exempt. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

Virginia taxes the first $3,000 of taxable income at 2%, the next $2,000 at 3%, the next $12,000 at 5% and everything above $17,000 at 5.75%. The schedule is the same for every filing status and is not indexed. Tax on the first $17,000 is $720, so a return with $100,000 of taxable income owes $720 plus 5.75% of $83,000, or $5,492.50. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

For taxable year 2026 the standard deduction is $8,750 for single filers and $17,500 for married couples filing jointly. It does not increase with age. (Virginia Tax: New Virginia tax laws for 2026)

Each filer and spouse gets a $930 personal exemption, and each person who is 65 or older by January 1 after the tax year, or blind, gets a further $800 exemption. A couple who are both 65 therefore subtract $3,460 of exemptions in addition to the standard deduction. (Virginia Tax: Exemptions)

Because the brackets are not wider for couples, a joint return can pay more than two single returns would. The Spouse Tax Adjustment on Form 760, line 17, corrects for this when both spouses have income: it lets the lower-income spouse use the 2%, 3% and 5% brackets again and is worth up to $259. It reaches the full $259 once each spouse has more than $17,000 of income after exemptions. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

The age deduction is $12,000 for each taxpayer 65 or older. Virginia Tax counts anyone who is 65 by January 1 after the tax year: the 2025 return covered people born on or before January 1, 1961, and the same rule puts the 2026 line at January 1, 1962. For anyone born after January 1, 1939 it is reduced by $1 for every $1 of adjusted federal AGI above $50,000 for a single filer or $75,000 for married taxpayers. Married couples must use their combined income for this test whether they file jointly or separately. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

The deduction disappears entirely at $62,000 of adjusted federal AGI for a single filer, $87,000 for a couple with one spouse 65 or older, and $99,000 for a couple who both qualify. Taxpayers born on or before January 1, 1939 receive the full $12,000 regardless of income. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

The additional $800 exemption for age 65 applies at every income level. A person who claims the age deduction cannot also claim the disability income subtraction or the low-income and earned income credits. (Virginia Tax, Form 760 Resident Individual Income Tax Instructions (2025))

The same three households appear on every state page, so the figures can be compared across states. Each is a full-year resident taking the standard deduction, with no dependents. The figures are state income tax only: any county, city or school district income tax is described on this page but not added in. Pension income is from a private employer, and IRA figures are taxable withdrawals from traditional accounts. The state tax is our calculation from Virginia's published 2026 rules; it is an illustration, not a return.

These households also owe federal income tax, which does not change with the state. The tax bracket calculator and the guide to taxes in retirement cover that side.

Real estate tax in Virginia is set and collected by counties and cities, not the state, and rates differ widely. Tax Foundation figures drawn from Census data put property taxes at 0.78% of owner-occupied home value in 2024, 28th among the states. There is no statewide homestead exemption and no statewide cap on assessment increases. (Tax Foundation, Property Taxes by State and County, 2026 (comparative figures from Census ACS data))

Most localities also levy an annual personal property tax on vehicles, commonly called the car tax. The state funds partial relief on the first $20,000 of value of a personal-use vehicle, delivered as a reduced rate or credit on the local bill; the percentage of relief is set by each locality each year. (Code of Virginia 58.1-3524, Tangible personal property tax relief)

The general sales tax rate is 5.3% in most of Virginia, a figure that combines a 4.3% state tax with a 1% local tax collected everywhere. Regional add-ons bring the rate to 6% in Northern Virginia, Central Virginia and Hampton Roads, and to 6.3% or 7% in a handful of other localities, including the Williamsburg area. (Virginia Tax: Retail sales and use tax)

The Tax Foundation puts the average combined rate at 5.77% as of January 2026, 41st in the country. (Tax Foundation, State and Local Sales Tax Rates, 2026 (comparative figures))

Groceries and essential personal hygiene products are taxed at a reduced 1% statewide. Prescription medicines and nonprescription drugs are exempt. (Code of Virginia 58.1-609.10, Miscellaneous sales tax exemptions (medicines and drugs))

Virginia has no inheritance tax and does not currently collect an estate tax. The estate tax that remains in the Code of Virginia is defined as the federal credit for state death taxes, a credit that no longer exists, and Virginia ended the tax for deaths on or after July 1, 2007. Estates of Virginia residents are subject only to the federal estate tax. (Virginia Tax: Estate and inheritance taxes)

Real estate a Virginia resident owns in another state can still be taxed by that state at death, under its own estate or inheritance tax rules for non-residents. Neighboring Maryland and the District of Columbia both have estate taxes. (Code of Virginia 58.1-901, Estate tax definitions)

The federal estate tax applies in every state. The estate tax calculator estimates both the federal tax and any state tax.

The standard deduction stays at $8,750 single and $17,500 joint for 2026. The 2026 Appropriation Act raises it to $9,200 and $18,400 for 2027 and to $9,300 and $18,600 for 2028 and 2029. After 2029 it is scheduled to fall back to $3,000 and $6,000 unless the General Assembly acts again. (Virginia Tax, 2026 Legislative Summary)

The military benefits subtraction reached its full $40,000 for taxable year 2025 after phasing in from $10,000 in 2022, $20,000 in 2023 and $30,000 in 2024. The age-55 requirement applied only to the 2022 and 2023 amounts and no longer applies. (Code of Virginia 58.1-322.02, Virginia taxable income; subtractions (subdivision 18, military benefits))

Virginia replaced rolling conformity to the Internal Revenue Code with a fixed conformity date of December 31, 2025. Federal tax changes enacted after that date will not flow into Virginia returns until the General Assembly adopts them. (Virginia Tax, 2026 Legislative Summary)

A 2026 law lets localities add 1% to the local sales tax, if voters approve in a referendum, to pay for school construction or renovation. Groceries and personal hygiene products are excluded from the increase. (Virginia Tax: New Virginia tax laws for 2026)

A person is a Virginia resident for income tax if they are domiciled in Virginia, or if they live in or maintain a place of abode in Virginia for more than 183 days of the year. Residents are taxed on income from all sources and file Form 760. (Virginia Tax: Residency status)

Someone who moves into or out of Virginia during the year is a part-year resident and files Form 760PY, reporting the income received while a resident. The standard deduction and personal exemptions are prorated for the period of residence. A person who keeps Virginia as their legal domicile while living elsewhere temporarily remains a resident. (Virginia Tax: Residency status)

Under federal law (4 U.S.C. 114) a state cannot tax the retirement income of a non-resident. A Virginia Retirement System pension, or an IRA built during a career in Virginia, is taxed only by the state where the retiree lives when the payments are received. In the other direction, a pension earned in a state with no income tax becomes Virginia income once the recipient is a Virginia resident. (4 U.S.C. 114, Limitation on State income taxation of certain pension income)