What Is the State Income Tax in Virginia?

Virginia’s income tax system is levied on the earnings of individuals residing or working within the Commonwealth. Understanding its structure is important for taxpayers. The system encompasses definitions of what income is subject to taxation, specific rates applied to different income levels, and various provisions designed to reduce the taxable amount.

Understanding Taxable Income

Taxable income in Virginia forms the basis for an individual’s state income tax liability. It generally aligns with federal adjusted gross income (AGI), with certain Virginia-specific additions and subtractions. Common sources of income include wages, salaries, tips, business income, interest, dividends, capital gains, rental income, and most pension or annuity income.

Virginia law provides for specific types of income that are either exempt or treated differently. All Social Security benefits are exempt from Virginia income tax. Certain military pay can also be partially or fully exempt, such as basic pay for service personnel on extended active duty or for Virginia National Guard wages. Eligible military retirees may subtract a portion of their military retirement income; the age 55 requirement for this subtraction was removed in 2024.

Virginia Income Tax Rates

Virginia operates a progressive income tax system, meaning that higher income levels are taxed at incrementally higher rates. For the 2024 tax year, Virginia’s income tax rates range from 2% to 5.75%.

• Taxable income between $0 and $3,000 is taxed at 2%.
• Income ranging from $3,001 to $5,000 is taxed at 3% on the amount over $3,000.
• For taxable income between $5,001 and $17,000, the rate is 5% on the amount over $5,000.
• Any taxable income exceeding $17,000 is subject to the highest rate of 5.75% on the amount over $17,000.

To calculate tax liability, taxpayers apply these rates to their Virginia taxable income, effectively taxing different portions of their income at the corresponding bracket rate. For example, if a taxpayer has $20,000 in taxable income, the first $3,000 is taxed at 2%, the next $2,000 (up to $5,000) at 3%, the subsequent $12,000 (up to $17,000) at 5%, and the remaining $3,000 (over $17,000) at 5.75%. These rates and brackets are established by state legislation and are subject to change by the Virginia General Assembly.

Virginia Deductions and Exemptions

Deductions and exemptions are provisions that reduce an individual’s taxable income, thereby lowering their overall tax liability. A key distinction exists between the Virginia standard deduction and itemized deductions. For the 2024 tax year, the standard deduction is $8,500 for single filers and $17,000 for married couples filing jointly.

Virginia taxpayers may opt to itemize deductions if their eligible expenses exceed the standard deduction amount. Common itemized deductions include certain medical expenses and specific subtractions for retirement income. Individuals aged 65 or older may claim an age deduction of up to $12,000, applicable to various forms of retirement income, with income-based limitations. Personal and dependent exemptions also reduce taxable income, with specific amounts allocated per qualifying individual.

Available Tax Credits

Tax credits directly reduce the amount of tax owed, dollar for dollar, after the tax liability has been calculated. This differs from deductions, which reduce the amount of income subject to tax. Virginia offers various tax credits.

One common credit is the credit for taxes paid to another state, which helps prevent double taxation if a Virginia resident earns income taxed by another state. Virginia provides a Credit for Low Income Individuals (CLI), a non-refundable credit for families whose Virginia adjusted gross income falls below federal poverty guidelines. This credit can be up to $300 for each personal or dependent deduction claimed. The state also has an Earned Income Tax Credit (EITC), which for tax years 2022 through 2025, is a refundable credit equal to 15% of the federal EITC claimed. Taxpayers generally cannot claim both the CLI and the state EITC, choosing the greater benefit. Specific credits exist for certain energy-efficient purchases or improvements, offering a deduction of 20% of sales taxes paid for qualifying equipment, capped at $500.

Filing Your Virginia Tax Return

Filing a Virginia tax return involves specific steps for individuals who meet filing requirements. A Virginia return is required if an individual’s Virginia adjusted gross income exceeds certain thresholds, such as $11,950 for single filers or $23,900 for married filing jointly for 2024. If a refund is due, filing is necessary to receive it, even if income is below the threshold.

The standard deadline for filing individual Virginia income tax returns is May 1. If this date falls on a weekend or holiday, the deadline shifts to the next business day. Taxpayers can submit returns via e-filing through approved tax software providers or mailing in paper forms. Official forms and instructions are available on the Virginia Department of Taxation website. Taxpayers can pay any tax due via direct debit, ACH credit, or credit/debit card payments, though card payments may incur a service fee. Virginia provides an automatic six-month extension to file individual income tax returns, typically extending the filing deadline to November 1. This extension applies only to filing, not to payment; any tax owed must still be paid by the original May 1 deadline to avoid penalties and interest. After filing, electronically submitted returns are processed within four weeks; mailed returns may take eight weeks or longer.