How Much Income Tax Will I Owe in Virginia?

Virginia levies a state income tax on its residents and non-residents earning income within the Commonwealth. This tax contributes to funding various state services and programs. The amount of tax owed depends on how income is defined, what deductions and exemptions can reduce taxable income, and which credits can directly lower the tax bill. The process begins with determining your total income and then systematically adjusting it to arrive at the final tax liability.

Virginia Income Tax Rates

Virginia operates a progressive income tax system with four tax brackets for the 2024 tax year. The lowest rate is 2% for taxable income up to $3,000. Income between $3,001 and $5,000 is taxed at 3%, while income from $5,001 to $17,000 is subject to a 5% rate. Any Virginia taxable income exceeding $17,000 is taxed at the highest marginal rate of 5.75%. This graduated structure means only the portion of income within a specific bracket is taxed at that rate.

Determining Your Taxable Income

Virginia taxable income (VTI) is generally derived from your federal adjusted gross income (AGI), with specific state-level modifications. Virginia law requires certain additions to federal AGI, such as interest income from state and local obligations outside of Virginia if exempt from federal taxation. Conversely, various subtractions from federal AGI are permitted. These may include income from U.S. government obligations, which is often federally taxable but state-exempt. Other common income types included in Virginia taxable income mirror federal classifications, encompassing wages, salaries, business income, interest, dividends, capital gains, and pension or annuity income. Accurately identifying all sources of income and applying the correct Virginia-specific adjustments is the initial step in computing your tax liability.

Reducing Your Taxable Income with Deductions and Exemptions

Taxpayers can reduce their Virginia taxable income through deductions and exemptions. Deductions lower the amount of income subject to tax, while exemptions provide a specific dollar reduction for the taxpayer and their dependents. For the 2024 tax year, the Virginia standard deduction is $8,500 for single filers and $17,000 for married couples filing jointly. Taxpayers may choose to itemize deductions if their eligible expenses exceed the standard deduction, generally following federal itemized deduction rules with some Virginia-specific differences, such as not deducting state and local income taxes.

Virginia also offers personal exemptions, allowing a $930 exemption for the taxpayer and each dependent claimed on their federal return. Additional exemptions of $800 are available for taxpayers who are age 65 or older or who are blind. An age deduction is also available, with the amount depending on birth date and income.

Specific deductions can further reduce taxable income, such as contributions to a Virginia 529 college savings plan, deductible up to $4,000 per account per year per beneficiary. Other notable deductions include certain long-term health care insurance premiums, unreimbursed educator expenses up to $500, and expenses for living organ and tissue donors.

Applying Tax Credits to Your Bill

Tax credits can directly reduce the amount of tax you owe. A tax credit is a dollar-for-dollar reduction of your tax bill, differing from deductions or exemptions that only reduce your taxable income. Virginia offers various credits, some of which are refundable, meaning they can result in a refund even if they reduce your tax liability below zero. Non-refundable credits can only reduce your tax liability to zero.

One common credit is the Earned Income Tax Credit (EITC), which for Virginia residents is 15% of the federal EITC amount, and is refundable for tax years 2022 through 2025. For tax years beginning on or after January 1, 2025, the refundable Virginia EITC will increase to 20% of the federal credit. Another significant credit is the Credit for Taxes Paid to Another State, which helps prevent double taxation if a Virginia resident earns income taxed by both Virginia and another state. This credit is limited to the lesser of the tax paid to the other state or the Virginia tax due on that specific income.

Virginia also provides a non-refundable Low Income Individuals Credit, which can be up to $300 for each personal and dependent exemption claimed. Taxpayers cannot claim both this credit and the state EITC. Other credits exist for specific circumstances, such as the Historic Rehabilitation Credit for eligible expenses related to certified historic structures, potentially up to 25% of costs. These credits are applied after the initial tax calculation, directly lowering the final amount due or increasing a refund.