Does Virginia Tax Pensions? Free Retirement Tax Calculator & State Map
POINTS
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Virginia taxes most pension income.
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Social Security benefits are exempt from Virginia income tax.
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Many retirees qualify for retirement income deductions.
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Military retirees may receive additional tax deductions.
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Roth withdrawals are generally tax free, while traditional withdrawals are usually taxable.
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Tax planning can help reduce your retirement tax bill.
Virginia taxes pension income under its state income tax rules, which can affect the after-tax amount retirees receive from their retirement benefits.
The tax treatment of pension payments varies based on the type of income and applicable state provisions.
Retirees evaluating their income sources should consider how Virginia’s tax rules apply to their pension benefits.
Does Virginia Actually Tax Pensions?
Yes. Virginia taxes most pension and retirement distributions as ordinary income.
Any pension or annuity income included on your federal return is taxable in Virginia if you are a VA resident.
This includes
- Private employer pensions
- Traditional IRA and 401(k) distributions
- Federal retirement annuities (CSRS/FERS)
- State/local government pensions, and
- Military retirement pay.
Virginia Tax Exemptions: Virginia provides a full state tax exemption for certain types of retirement income.
Social Security Benefits: Fully exempt from Virginia income tax. Any Social Security benefits included in your federal adjusted gross income (AGI) can be subtracted when calculating your Virginia taxable income.
Tier I Railroad Retirement Benefits: Also fully exempt. These benefits receive the same Virginia tax treatment as Social Security benefits and may be subtracted if they are included in your federal AGI.
How Virginia Taxes Retirement Income
Virginia starts with your federal AGI and layers on state-specific adjustments from there:
| Income Type | Virginia Treatment |
|---|---|
| Social Security | Not taxed |
| Tier I Railroad Retirement | Not taxed |
| Traditional IRA withdrawals | Taxed |
| 401(k) / 403(b) withdrawals | Taxed |
| Private pensions | Taxed |
| Government pensions | Taxed |
| Military retirement | Taxed* *Eligible subtraction may apply |
| Roth IRA qualified withdrawals | Not taxed |
Source: tax.virginia.gov — Virginia taxes and your retirement
Tax rates
Virginia’s structure is progressive:
- 2% on the first $3,000 of taxable income
- 3% on the next $2,000 (income between $3,000 and $5,000)
- 5% on the next $12,000 ($5,000 to $17,000), and
- 5.75% on everything above $17,000.
Retirement account distributions
Traditional IRA, 401(k), pension, and annuity distributions all count as federal AGI and get taxed by Virginia in full.
There is no additional state exclusion for retirement plan distributions other than the Age Deduction.
Military pay
Yes, your military retirement pay and other military pensions are included in federal AGI and taxed by Virginia.
But it does offer a special subtraction for military retirement up to $40,000.
Virginia Pension Tax Exemptions and Deductions
Virginia provides several subtractions and credits that will benefit retirees:
1. Age-Based Deduction
Taxpayers age 65 or older may qualify for an age deduction of up to $12,000 per eligible taxpayer.
If both spouses qualify, each spouse may claim a deduction of up to $12,000.
Married taxpayers should calculate the allowable amount using Virginia’s age deduction worksheet or calculator.
2. Social Security and Tier I Railroad Retirement Benefits
Virginia allows a subtraction for Social Security benefits and Tier I Railroad Retirement benefits that were included in federal adjusted gross income.
Benefits that were not federally taxable do not require a Virginia subtraction because they were not included in federal income.
3. U.S. Government Obligation Interest
Interest income from certain direct obligations of the United States government, such as qualifying U.S. Treasury obligations, may be subtracted if the income was included in federal adjusted gross income.
4. Disability Income Subtraction
Eligible taxpayers receiving federally taxable disability retirement income may subtract up to $20,000 per taxpayer.
The subtraction applies to qualifying permanent and total disability income under federal law.
A taxpayer generally must choose between the disability subtraction and the age deduction; both cannot be claimed for the same taxpayer.
5. Military Retirement Subtraction
Virginia provides a subtraction for qualifying military benefits, including
- Eligible military retirement income and
- Certain Survivor Benefit Plan benefits, when those amounts are included in federal adjusted gross income.
Tax Example: Virginia’s military retirement subtraction reduces your Virginia taxable income dollar-for-dollar, up to the maximum amount allowed for the tax year.
For example, if you receive $50,000 in qualifying military retirement income in 2025, you may subtract up to $40,000 from your Virginia taxable income.
The remaining $10,000 would still be subject to Virginia income tax, assuming no other deductions or exemptions apply.
6. Tax Credits and Property Tax Relief
Virginia does not provide a separate statewide tax credit specifically for retirement income.
But some seniors and disabled taxpayers may qualify for other programs, such as certain renters’ credits or local real estate tax relief programs offered by counties and cities.
Virginia Vs Other US States | Retirement Friendly
How each state taxes Social Security, pensions, and 401(k)/IRA withdrawals
Hover or tap a state to see details
States with no income tax or broad retirement exemptions can help retirees keep more of their income, but taxes are only one factor.
So, you need to consider the full picture, such as housing costs, property taxes, healthcare, insurance, and overall cost of living, before choosing your ideal retirement location.
Virginia Retirement Tax FAQ
No. Virginia does not tax Social Security benefits. Any federally taxable Social Security income can be subtracted on your Virginia return.
Yes. Virginia taxes state and local pensions, including VRS benefits, with no special exemption for public pensions.
Yes. Military and federal retirement income is taxable by Virginia if included in federal AGI. A military retirement subtraction of up to $40,000 is available beginning in 2025.
Eligible taxpayers age 65 or older may claim a deduction of up to $12,000. The deduction is reduced for taxpayers above the income limits.
No additional documents are typically required with your return. Keep records supporting any claimed deductions in case of an audit.
Possibly. Moving to a state with no income tax may reduce taxes on future retirement income, but residency rules and other taxes still apply.
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