Retirement Tax in Virginia: Complete Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Retirement Tax in Virginia: Complete Guide 2026
Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.
Virginia offers a moderate tax environment for retirees, with an Age Deduction that provides partial relief on retirement income for those 65 and older. Social Security benefits are fully exempt from Virginia income tax, aligning with the majority of states. However, Virginia does tax most other forms of retirement income — including pensions, 401(k) distributions, and IRA withdrawals — at its graduated income tax rates. Understanding Virginia’s Age Deduction rules and income phase-outs is essential for effective retirement tax planning.
Virginia Retirement Tax Rates (2026)
| Income Type | State Tax Treatment |
|---|---|
| Social Security | Fully exempt |
| Pension / 401(k) / IRA | Taxed at ~2% to ~5.75% (graduated) |
| Age Deduction (age 65+) | Up to ~$12,000 per person (income-phased) |
| Military retirement pay | Up to ~$40,000 subtraction |
| Railroad Retirement (Tier 1) | Exempt |
Virginia’s graduated income tax tops out at ~5.75% on income over ~$17,001. The Age Deduction provides a subtraction from Virginia adjusted gross income for taxpayers born on or before January 1, 1939, or those aged 65 and older.
How Retirement Income Is Taxed in Virginia
Virginia’s Graduated Rates
| Virginia Taxable Income | Tax Rate |
|---|---|
| ~$0 to ~$3,000 | ~2% |
| ~$3,001 to ~$5,000 | ~3% |
| ~$5,001 to ~$17,000 | ~5% |
| Over ~$17,000 | ~5.75% |
Most retirement income falls into the ~5.75% bracket after deductions.
The Age Deduction
Virginia’s Age Deduction allows eligible taxpayers (age 65+) to subtract up to ~$12,000 per person from Virginia AGI. However, this deduction phases out as income increases:
- The deduction begins to reduce for taxpayers with federal AGI above ~$50,000.
- For every ~$1 of AGI above ~$50,000, the deduction is reduced by ~$1.
- The deduction is fully eliminated at ~$62,000 of federal AGI.
- Married couples each qualify for their own ~$12,000 deduction if both are 65+, with separate income phase-out calculations.
Social Security Benefits
Virginia fully exempts Social Security benefits from state income tax. Benefits are subtracted from federal AGI when computing Virginia taxable income.
Military Retirement Pay
Virginia provides a subtraction of up to ~$40,000 for military retirement pay. This benefit has expanded in recent years and applies to all military retirees regardless of age.
Retirement Income Tax Scenarios
| Scenario | Federal Tax | Virginia Tax | Combined |
|---|---|---|---|
| Social Security ~$30,000 only | ~$0 to ~$7,650 | ~$0 | ~$0 to ~$7,650 |
| Pension ~$50,000, age 65+ (AGI under ~$50K) | Varies | Varies | |
| Pension ~$70,000, age 65+ (no Age Ded.) | Varies | ~$3,335 | Varies |
| Military retirement ~$35,000 | Varies | ~$0 (within ~$40K subtraction) | Varies |
| MFJ, both 65+, ~$80,000 total retirement | Varies | ~$2,688 | Varies |
Other Tax Considerations for Virginia Retirees
Property Tax
Virginia’s average effective property tax rate is ~0.80%, below the national average. Many localities offer property tax relief programs for seniors aged 65+ meeting income and net worth requirements. These programs can provide partial or full exemption from real estate taxes. Programs vary significantly by locality, so check with your county or city treasurer.
Estate Tax
Virginia does not impose a state estate tax or inheritance tax. Estates are subject only to federal estate tax rules.
Sales Tax
Virginia’s state sales tax rate is ~4.3%, with local taxes bringing the combined rate to ~5.3% to ~7% depending on the locality. Groceries are taxed at a reduced rate of ~1% (state portion). Prescription drugs are exempt.
Comparison to Neighboring States
| State | Social Security | Pension / IRA | Top Income Tax Rate |
|---|---|---|---|
| Virginia | Exempt | Taxed (Age Deduction up to ~$12K) | ~5.75% |
| Maryland | Exempt | Taxed (pension exclusion up to ~$36,200) | ~5.75% |
| North Carolina | Exempt | Fully taxable | ~4.25% |
| West Virginia | Exempt | Taxable; limited adjustments | ~3% to ~6.5% |
| D.C. | Exempt | Fully taxable | ~4% to ~10.75% |
| Kentucky | Exempt | ~$31,110 exclusion | ~4.0% |
Virginia’s Age Deduction of up to ~$12,000 provides less relief than Maryland’s pension exclusion or Kentucky’s broader exclusion, and the income phase-out eliminates the benefit for moderate-income retirees with AGI above ~$62,000.
Tips for Virginia Retirees
- Maximize the Age Deduction by managing your AGI to stay below ~$50,000 if possible. Strategies include delaying IRA withdrawals, using Roth accounts, or timing capital gains to keep AGI in the phase-out-free range.
- Use Roth conversions strategically before age 65 to shift future retirement income into tax-free Roth withdrawals that do not count toward Virginia AGI.
- Claim the military retirement subtraction of up to ~$40,000 — this benefit is available regardless of age and significantly reduces Virginia tax for military retirees. See the federal income tax guide.
- Explore local property tax relief — many Virginia cities and counties offer senior citizens real estate tax relief based on income and net worth, providing substantial savings for qualifying homeowners.
- Coordinate Social Security timing — since Virginia exempts SS, delaying benefits to increase the amount may be advantageous if it means lower withdrawals from taxable accounts during the delay period.
- Consider the standard deduction — Virginia’s standard deduction is ~$8,000 (single) or ~$16,000 (MFJ), which applies to all filers and further reduces taxable retirement income.
- File the correct forms — Virginia retirement income is reported on Form 760 with Schedule ADJ for the Age Deduction. Consult find a CPA near you for filing assistance.
Key Takeaways
- Virginia fully exempts Social Security benefits from state income tax.
- The Age Deduction provides up to ~$12,000 per person (age 65+) but phases out completely at ~$62,000 of federal AGI.
- Most retirement income is taxed at Virginia’s top rate of ~5.75%.
- Military retirees receive a subtraction of up to ~$40,000 regardless of age.
- Virginia has no state estate or inheritance tax.
- Local property tax relief programs for seniors vary widely across Virginia’s cities and counties.
Next Steps
- Federal Income Tax Guide 2026 — understand how federal retirement income rules interact with Virginia’s system.
- State Income Tax Rates Comparison 2026 — compare Virginia’s retirement tax friendliness to neighboring states.
- Tax Bracket Calculator — estimate your combined federal and Virginia retirement tax.
- Find a CPA Near You — work with a Virginia tax professional on retirement income planning.