How Virginia taxes retirement income
Virginia does not tax Social Security benefits. Pensions and 401(k)/IRA withdrawals are partly taxed (there is an exclusion, then the rest is taxed). Virginia does not tax Social Security or Tier 1 Railroad Retirement benefits. Virginia's age deduction applies equally to pensions, 401(k)/IRA withdrawals, and other retirement income: taxpayers age 65+ (the age threshold is set each tax year as born on or before Jan. 1 of the year that makes you 65; those born on or before Jan. 1, 1939 keep the full amount regardless of income) may subtract up to $12,000 each. For those not in the pre-1939 grandfather group, the $12,000 is reduced dollar-for-dollar once adjusted federal AGI exceeds $50,000 (single) or $75,000 (married filing jointly); the Social Security exemption itself does not count toward that threshold. Retirement income beyond the deduction is taxed as ordinary income.
Retirement income tax in Virginia, at a glance
| Income type | Taxed by Virginia? |
|---|---|
| Social Security | No |
| Pensions | Partially (exclusion applies) |
| 401(k) / IRA withdrawals | Yes |
| Estate / inheritance tax | None |
| Avg. property tax rate | 0.78% of home value |
Does Virginia tax Social Security benefits?
No. Virginia does not tax Social Security benefits.
Does Virginia tax pensions and 401(k) or IRA withdrawals?
Partly. Virginia does not tax Social Security or Tier 1 Railroad Retirement benefits. Virginia's age deduction applies equally to pensions, 401(k)/IRA withdrawals, and other retirement income: taxpayers age 65+ (the age threshold is set each tax year as born on or before Jan. 1 of the year that makes you 65; those born on or before Jan. 1, 1939 keep the full amount regardless of income) may subtract up to $12,000 each. For those not in the pre-1939 grandfather group, the $12,000 is reduced dollar-for-dollar once adjusted federal AGI exceeds $50,000 (single) or $75,000 (married filing jointly); the Social Security exemption itself does not count toward that threshold. Retirement income beyond the deduction is taxed as ordinary income.
For the mechanics of required withdrawals in retirement, see what is an RMD.
Sources
- Virginia taxation of retirement income (Social Security, pensions, 401(k)/IRA): Virginia Department of Revenue / Taxation.