How Much Income Tax Do You Pay in Virginia?

Virginia has a state income tax system that requires residents to pay a portion of their earnings to the Commonwealth. Understanding this system involves navigating how income is defined, how deductions and exemptions are applied, and what tax rates are currently in effect. The process also includes awareness of available tax credits that can directly reduce the amount owed. Finally, knowing the appropriate filing and payment procedures ensures compliance with state tax regulations.

Determining Virginia Taxable Income

Virginia’s income tax calculation begins with an individual’s gross income, which includes earnings from various sources such as wages, salaries, interest, dividends, business profits, and capital gains. This initial figure is then adjusted to arrive at the Virginia taxable income, the amount upon which the state’s tax rates are applied. Adjustments involve specific additions to and subtractions from the federal adjusted gross income (AGI).

Certain types of income, though not always included in federal AGI, must be added back for Virginia tax purposes. An example is interest income derived from obligations of other states or their political subdivisions, which is tax-exempt at the federal level but taxable by Virginia. Conversely, Virginia allows specific subtractions from federal AGI to reduce taxable income. These subtractions can include Social Security benefits, certain types of retirement income such as railroad retirement benefits or military retirement pay, and interest earned from U.S. government obligations. Additionally, contributions to Virginia’s higher education savings plans, like Virginia529 accounts, can be subtracted, with specific annual limits such as $4,000 per account for individuals under 70, with carryover provisions for excess contributions.

After accounting for these additions and subtractions, taxpayers must choose between claiming the Virginia standard deduction or itemizing their deductions. For the 2024 tax year, the standard deduction is $8,500 for single filers and $17,000 for married couples filing jointly. Beginning with the 2025 tax year, these amounts are set to increase to $8,750 for single filers and $17,500 for married couples filing jointly. If a taxpayer itemizes deductions on their federal return, they must also itemize on their Virginia return, which allows them to deduct eligible expenses such as medical costs exceeding a certain percentage of AGI, state and local taxes (SALT) up to the federal limit, home mortgage interest, and charitable contributions. The choice between the standard and itemized deduction depends on which option results in a lower taxable income for the individual.

Virginia Individual Income Tax Rates

Virginia employs a progressive income tax system, meaning higher income levels are taxed at higher rates. Virginia’s individual income tax rates are structured across four brackets. The lowest bracket taxes income from $0 to $3,000 at a rate of 2%. Income between $3,001 and $5,000 is taxed at 3%.

The next bracket applies a 5% rate to income ranging from $5,001 to $17,000. Finally, any Virginia taxable income exceeding $17,000 is subject to the highest marginal rate of 5.75%. These rates are applied to the Virginia taxable income calculated after all additions, subtractions, and deductions have been accounted for.

Key Virginia Tax Credits

Virginia tax credits offer a direct reduction of the tax owed, differing from deductions which only lower taxable income. A key credit is the Credit for Taxes Paid to Another State, available to Virginia residents who paid income tax to another state on income also taxed by Virginia. This credit helps prevent double taxation on the same income, though it is limited to the lesser of the tax actually paid to the other state or the proportionate Virginia tax on that income.

The Low-Income Individuals Credit (CLI) provides a non-refundable credit for taxpayers whose Virginia adjusted gross income falls below federal poverty guidelines. This credit can be up to $300 for each personal and dependent exemption claimed, but it cannot exceed the taxpayer’s total tax liability. Taxpayers cannot claim both the CLI and the Virginia Earned Income Tax Credit (EITC), and must choose the more beneficial option.

Virginia also offers an Earned Income Tax Credit (EITC), which for tax years 2022 through 2025 is a refundable credit equal to 15% of the federal EITC. For tax year 2025 and beyond, the refundable Virginia EITC is set to increase to 20% of the federal EITC. Other specialized credits exist, such as the Land Preservation Tax Credit, which provides a credit for donated land or conservation easements, allowing taxpayers to claim up to $50,000 per year, with unused credits potentially carried forward for up to 10 years or even sold to other taxpayers.

Filing and Payment Process

Individuals are generally required to file a Virginia income tax return if they are residents, part-year residents, or nonresidents with Virginia-source income, and if they are required to file a federal income tax return. Additionally, a Virginia return is necessary if an individual’s Virginia adjusted gross income (VAGI) meets or exceeds certain thresholds, such as $11,950 for single filers or $23,900 for married couples filing jointly. Even if not required to file, a return must be submitted to receive a refund of any withheld Virginia income tax.

The annual deadline for most individual income tax returns in Virginia is typically May 1. If this date falls on a weekend or legal holiday, the deadline is extended to the next business day. Virginia provides an automatic six-month extension to file, extending the filing date for calendar-year filers to November 1, without needing to submit a separate extension request. However, this extension applies only to filing the return, not to paying any taxes owed; at least 90% of the tax liability must be paid by the original May 1 deadline to avoid penalties.

Taxpayers can file electronically through approved tax software or Virginia Tax Online Services, or by mailing a paper return. Payment options include direct debit, credit/debit card (often with a fee), or mailing a check. For income not subject to withholding, such as from self-employment, estimated tax payments may be required quarterly to avoid penalties. Before beginning the filing process, taxpayers should gather essential documents including W-2 forms, 1099 forms, their completed federal tax return, and any other relevant income or deduction records.