Virginia Capital Gains Tax, Explained
Effectively a flat 5.75% on every gain, long or short. The clean math, the NoVA border questions, and where the planning leverage actually lives.
Quick Answer
Virginia taxes capital gains as ordinary income, and because the top 5.75% bracket begins at just $17,000 of taxable income, every meaningful gain effectively pays a flat 5.75%, long-term or short. The real variability in your bill is federal: the 0/15/20% stack plus the 3.8% NIIT. Enter 5.75 in the state field of our capital gains tax calculator and you have your combined number.
Effectively Flat: What 5.75% Means for a Real Sale
Virginia's brackets technically run 2% to 5.75%, but the ladder is so short, the top rung arrives at $17,000, that the lower rates are a rounding error on any real gain. The practical model is simple: gain × 5.75%, no holding-period discount, no surtaxes, no cliffs.
| Sale | Virginia (5.75%) | Typical federal (15% + NIIT where applicable) | Combined |
|---|---|---|---|
| $100,000 long-term gain, $200K household | $5,750 | ~$15,000 | ~$20,750 (≈21%) |
| $400,000 long-term gain, $350K household | $23,000 | ~$75,200 (15% + 3.8%) | ~$98,200 (≈25%) |
| $100,000 short-term gain, top bracket | $5,750 | ~$37,000 + NIIT | ~$46,550 (≈47%) |
Virginia's simplicity moves the planning federal
With no state discount to chase, every Virginia-side strategy is really a federal strategy that Virginia inherits automatically: hold past one year, harvest losses, time low-income years, use the 0% federal bracket. When the federal number drops, Richmond's base drops with it.
The Northern Virginia Questions: DC, Maryland, and Federal Careers
Half our Virginia questions start with "but I work in DC." For capital gains the answer is cleaner than for wages: intangible investment gains are taxed by your state of residence. Live in Arlington, work in the District, sell $300K of stock. Virginia taxes it, DC doesn't. The commuter reciprocity puzzles that complicate paychecks mostly don't reach your brokerage account.
Two genuine multi-state wrinkles do exist: real estate located in another state (taxed by that state, with a Virginia credit mechanism handling the overlap), and military households, where a service member's, and often a spouse's, legal domicile may not be Virginia at all, changing which state taxes the gain. Both are squarely facts-driven; both are worth a conversation before a sale rather than after.
Home Sales, Rentals, and the 1031
Virginia's return starts from federal AGI, which quietly does a lot of favors: the Section 121 exclusion on your home ($250K/$500K), installment-sale treatment, and 1031 exchange deferral all flow through automatically. A NoVA homeowner clearing the exclusion pays 5.75% only on the excess; a landlord exchanging into a Carolina beach rental defers Virginia tax right alongside federal, see the 1031 exchange rules.
Rental sellers: remember the federal layer that Virginia simply re-taxes as more income, depreciation recapture at up to 25% federally. And weigh keeping the old house as a rental against selling inside the exclusion window: Sell or Rent Your House?
What changed in Virginia
Rate and rule changes for recent tax years and changes already enacted for future years, each linked to the state source. Sources last checked October 20, 2026.
Tax year 2025
- In effect
Military benefits subtraction reaches $40,000
The military benefits subtraction reached its full $40,000 on 2025 returns, with no age requirement, and continues for 2026. The age deduction (up to $12,000 at 65, income-tested) is unchanged.
Effective January 1, 2025. Source: Virginia Tax: military benefits FAQ, checked September 2, 2026.
Tax year 2026
- In effect
Standard deduction $8,750 single / $17,500 joint
Virginia Tax says the standard deduction remains $8,750 single and $17,500 joint for 2026 and increases beginning with tax year 2027. Rates stay 2% to 5.75%, with the top rate starting at $17,000.
Effective January 1, 2026. Source: Virginia Tax: new Virginia tax laws, checked October 20, 2026.
Educational, not individualized tax advice. Rates shown are statutory; your result depends on residency, filing status, and the income involved.
Virginia Capital Gains FAQs
How much is capital gains tax in Virginia?
Virginia taxes capital gains as ordinary income, no special rate, no holding-period discount. The top bracket is 5.75%, and it starts at just $17,000 of taxable income, so for anyone with a meaningful gain the practical answer is a flat 5.75%. That sits on top of the federal 0/15/20% brackets and the 3.8% NIIT.
Does Virginia have a lower rate for long-term capital gains?
No. The federal government rewards holding an asset over a year; Virginia doesn't. A ten-year gain and a ten-day gain both pay the same 5.75%. Holding period still matters enormously for the federal side of the bill, just not for Richmond's share.
I live in Virginia but work in DC or Maryland, who taxes my investment gains?
Your state of residence. Investment gains from stock and similar intangibles are taxed where you live, not where you work, the DC/MD/VA reciprocity questions that complicate wages generally don't apply to your brokerage account. Sell while a Virginia resident and Virginia taxes the gain at 5.75%, full stop.
Does Virginia tax the gain when I sell my home?
Virginia starts from federal adjusted gross income, so the federal Section 121 exclusion, $250,000 of primary-residence gain, $500,000 married filing jointly, flows through automatically. Only gain above the exclusion is taxed, at 5.75%. In Northern Virginia's market, clearing the exclusion after long ownership is common; the excess is the planning conversation.
Do I need to make estimated payments on a big Virginia gain?
Usually yes, both to the IRS and to Virginia, in the year of the sale. A large Q4 gain typically means a January estimated payment; skipping it earns an underpayment charge that works like interest. The federal safe-harbor rules (and the withholding rescue) are covered in our estimated tax payments guide.
Does a 1031 exchange work for Virginia taxes?
Yes. Because Virginia conforms to federal income calculations, a properly executed 1031 exchange defers the Virginia tax right along with the federal, including on exchanges into property outside Virginia. The federal 45- and 180-day clocks are the ones that matter.
Capital gains tax by state
Selling something big in Virginia?
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