Does Virginia Tax Retirement Income?
Virginia exempts Social Security and offers an age 65 deduction of up to $12,000, but that deduction phases out with income. Most pension, 401(k), and IRA income is taxable at rates up to 5.75%.
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Quick answer
Virginia exempts Social Security and offers an age 65 deduction of up to $12,000, but that deduction phases out with income. Most pension, 401(k), and IRA income is taxable at rates up to 5.75%. The top state individual income-tax rate shown for 2026 is 5.75%.
Official sources: Virginia Tax, Virginia taxes and your retirement
How Virginia Treats Each Retirement Income Stream
| Income stream | Virginia treatment |
|---|---|
| Social Security | Social Security benefits are not taxed. Any portion taxed federally is subtracted on the Virginia return. |
| Public and private pensions | Private and public pension income is generally taxable in Virginia, the same as it is federally. The age deduction, when available, is the main offset. |
| Traditional 401(k) and IRA withdrawals | Traditional 401(k) and IRA withdrawals are generally taxable in Virginia. Roth distributions that are tax free federally stay tax free in Virginia. |
| Military retirement pay | Virginia allows a military benefits subtraction of up to $40,000 of military retirement income and qualifying survivor benefits for 2025 and later years, with no age requirement. It can be claimed alongside the age deduction when both apply. |
Virginia is not the tax haven its exempt Social Security suggests. The age deduction phases out quickly, so middle-income retirees with meaningful 401(k) withdrawals often lose most of the $12,000 while still facing a 5.75% top rate.
The State Exclusion That Changes the Math
Taxpayers 65 and older can claim an age deduction of up to $12,000 each. For those born after January 1, 1939, the deduction is reduced dollar for dollar by adjusted federal AGI above $50,000 for single filers and $75,000 combined for married filers, so many retirees get only part of it or none.
Model the actual eligibility rule
Manage adjusted federal AGI around the $50,000 and $75,000 phase-out lines. A modest shift in withdrawal timing can preserve thousands of dollars of age deduction, and military retirees should confirm they are stacking the $40,000 subtraction with the age deduction correctly.
A Worked Retirement-Income Example
A 68-year-old single filer with $30,000 of Social Security, $40,000 from a 401(k), and a $20,000 private pension excludes the Social Security, leaving $60,000 of Virginia income. That income puts adjusted federal AGI about $10,000 over the $50,000 phase-out threshold, cutting the $12,000 age deduction to roughly $2,000, so about $58,000 remains before the standard deduction.
This is a state-income example, not a tax return
Federal tax, local income tax, filing status, deductions, basis, Roth treatment, residency, and plan-specific rules can change the result. Use the example to compare structure, not as individualized tax advice.
Military Retirement and Transfer-Tax Fine Print
Military retirement: Virginia allows a military benefits subtraction of up to $40,000 of military retirement income and qualifying survivor benefits for 2025 and later years, with no age requirement. It can be claimed alongside the age deduction when both apply.
Estate and inheritance tax: Virginia has no estate or inheritance tax. Its estate tax was repealed for deaths after July 1, 2007.
Should Retirement Taxes Drive a Move to Virginia?
Virginia is not the tax haven its exempt Social Security suggests. The age deduction phases out quickly, so middle-income retirees with meaningful 401(k) withdrawals often lose most of the $12,000 while still facing a 5.75% top rate.
Manage adjusted federal AGI around the $50,000 and $75,000 phase-out lines. A modest shift in withdrawal timing can preserve thousands of dollars of age deduction, and military retirees should confirm they are stacking the $40,000 subtraction with the age deduction correctly.
Compare the annual retirement-income result with property tax, insurance, sales tax, health-care access, housing cost, and the residency facts needed to leave the former state. For a broader comparison, use our 51-jurisdiction retirement tax table.
Virginia Retirement Tax FAQs
Planning retirement income in Virginia?
We can model the state and federal interaction before a large distribution, Roth conversion, or interstate move. The initial consultation is free. Educational content is not individualized tax advice.