Virginia Tax Guide: What You’ll Pay in 2024
Virginia has a graduated income tax, and its top income tax rate ranks slightly below average among states. Virgina has one of the lowest sales tax rates, but taxes most sources of retirement income. There are some tax breaks for people 65 and older and no tax on Social Security benefits.
The big picture:
- Income tax: 2 percent to 5.75 percent
Virginia has a graduated income tax, with four tax brackets. Rates start at 2 percent and max out at 5.75 percent.
- Property tax: 0.87 percent (average) of a home’s assessed value
Average property tax rates vary widely across Virginia. The average tax bill is $1,764, or 0.87 percent of a home’s assessed value, according to the Tax Foundation.
- Sales tax: 5.77 percent (average combined state and local)
The state sales tax is 5.3 percent, but some counties add a local tax that can raise combined sales tax rates up to 7 percent. The average combined state and local sales tax is 5.77 percent, the 10th lowest in the country, according to the Tax Foundation.
How is income taxed in Virginia?
Virginia is one of 30 states (along with the District of Columbia) that use a graduated income tax, meaning individuals with lower incomes are taxed at lower rates than individuals with higher incomes. Virginia has four tax brackets, which start at a 2 percent tax rate and cap out at 5.75 percent for the highest earners.
You must file taxes if you have a Virginia adjusted gross income above $11,950 (single, or married filing separately) or $23,900 (married and filing jointly).
Virginia tax brackets:
*Not all of your taxable income is taxed at the same rate. For example, if your taxable income is $50,000, the first $3,000 would be taxed at 2 percent, income above $3,000 up to $5,000 would be taxed at 3 percent, income above $5,000 up to $17,000 would be taxed at 5 percent, and the remainder would be taxed at 5.75 percent.
When a married couple files jointly, the first $17,000 of their total taxable income is taxed at the lower rates, and the remainder is taxed at 5.75 percent. Married couples who file jointly may be eligible for a $259 credit if each spouse received income during the taxable year and the combined total income is over $3,000. With this adjustment, two-income couples who file a joint return won’t owe more taxes than the combined tax that would be due if separate returns were filed.
Watch the video below to learn how to identify your 2023 federal income tax brackets.
Are pensions or retirement income taxed in Virginia?
Yes, Virginia taxes most sources of retirement income. This includes money withdrawn from pensions, 401(k)s, 403(b)s and traditional IRAs.
AARP’s Retirement Calculator can help you determine if you are saving enough to retire when — and how — you want.
What about investment income?
Capital gains in Virginia are taxed as regular income, but taxpayers may deduct any
income that’s taxed as a long-term capital gain for federal income tax purposes. (If you’ve held an asset for more than a year and sell it for a profit, your income is considered a long-term capital gain.)
Taxpayers may also deduct income made from investments in “qualified businesses,” such as those related to agricultural technologies, energy, environmental technology, medical device technology or any similar technology-related field. The business must have its principal facility in Virginia and less than $3 million in annual revenues for the fiscal year preceding the investment.
Does Virginia tax Social Security benefits?
Virginia doesn’t tax Social Security benefits, and if any portion of your Social Security benefits is taxed at the federal level, you can subtract that amount on your Virginia tax return.
You’ll pay federal taxes on a portion of your benefits if your total income exceeds certain thresholds. Up to 50 percent of your benefits will be taxed if you file an individual tax return and make $25,000 to $34,000 in total income, or if you file jointly and as a couple make $32,000 to $44,000 in total income. Up to 85 percent of your benefits will be taxed by the federal government if your total income is more than $34,000 individually or $44,000 if filing jointly as a couple.
AARP’s Social Security Calculator can assist you in determining when to claim and how to maximize your Social Security benefits.
How is property taxed in Virginia?
Real estate tax is a local tax based on the assessed value of your home and administered by cities, towns and counties in Virginia. Tax rates vary depending on where you live, with average bills ranging from $378 in Buchanan County to more than $10,000 in Falls Church (part of the Washington, D.C., metropolitan area). The average tax bill statewide is $1,764, or 0.87 percent of a home’s assessed value, according to the Tax Foundation.
If you retrofitted or built a home to include accessible features, such as a zero-step entrance, you may qualify for the state’s Livable Home Tax Credit credit of up to $6,500.
Virginia also has a personal property tax on property like vehicles, boats, tools and business furniture. This is a local tax administered by cities and counties.
For more information about real estate and property taxes in your county, use the Department of Taxation’s Property Tax Resources Map.
What about sales tax and other taxes?
- Sales and use tax: The state sales tax is 5.3 percent, but some counties add a local tax that can raise combined sales tax rates up to 7 percent. The average combined state and local sales tax is 5.77 percent, according to the Tax Foundation. Statewide, most grocery items and some personal hygiene items are taxed at a reduced rate of 1 percent. See what items qualify on the Department of Taxation’s website.
- Gas tax: The Virginia fuel tax is 29.8 cents per gallon for gasoline and 30.8 cents per gallon for diesel. Diesel fuel purchased and used in a diesel passenger car, pickup or panel truck or a truck with a gross vehicle weight rating of 10,000 pounds or less is eligible for a partial tax refund. The current refund rate is 1 cent per gallon — the difference between the tax rate on diesel fuel and the tax rate on gasoline. To learn more about other Virginia motor fuel tax refunds, such as refunds for fuel used in boats or taxis, visit the Department of Taxation’s website.
- Vehicle license tax: Virginia charges a 4.15 percent Sales and Use Tax (SUT) at the time of titling whenever a vehicle is sold and/or the ownership of the vehicle changes. The amount is based on the vehicle’s gross sales price, or $75, whichever is greater. The gross sales price is the cost of the vehicle after any rebates or incentives are applied. It includes the dealer processing fee, but does not include any other price reductions, such as credit for trade-ins, unpaid liens or other unpaid credits.
- Alcohol taxes: Wine and liquor are subject to state and local taxes. Additionally, Virginia charges a 20 percent state tax on liquor and a 4 percent state tax on wine, along with a $0.40 per liter wine tax. Beer and wine coolers are subject to an excise tax of $0.2565 per gallon per barrel, and between $0.02 and $0.0265 per bottle, depending on the size of the bottle.
- Lottery winnings: Lottery winnings under $5,000 are not taxed. Lottery winnings over $5,000 are taxed at a 4 percent rate. The tax applies to the entire amount of the prize, not just the amount in excess of $5,000. Any Virginia Lottery winnings less than $600 that are included in federal adjusted gross income may be subtracted on your Virginia tax return. If more than one prize has been received, each prize of less than $600 may be subtracted.
Will I or my heirs have to pay inheritance or estate tax?
No. Virginia does not have an estate or inheritance tax.
However, certain remainder interests are still subject to being taxed.
Are there any tax breaks for older residents?
Individuals 65 and older may qualify for an income tax deduction. The amount of the deduction will depend upon your birth date and/or income.
Those born on or before Jan. 1, 1939, may claim an age deduction of $12,000. If you were born on or between Jan. 2, 1939, and Jan. 1, 1956, your deduction is determined by your income — specifically, your adjusted federal adjusted gross income (AFAGI). For help calculating your deduction, use the Department of Taxation’s Age Deduction Calculator.
You may not claim the age deduction if you claim a disability income subtraction — a credit of up to $20,000 on income received for permanent and total disability.
Virginia also allows an $800 tax exemption for individuals who are age 65 or over on or before Jan. 1, 2024.
Are military benefits taxed?
Military pensions are taxable in Virginia, but individuals age 55 and older may be eligible for a tax credit of up to $20,000 via the state’s Military Benefits Subtraction program.
What is the deadline for filing Virginia taxes in 2024?
The deadline for filing in 2024 is May 1, which is 16 days after the April 15 deadline for federal tax returns. For help estimating your annual income taxes, use AARP’s Tax Calculator.
If you need more time to file, you can apply for a six-month extension. Learn more on the Department of Taxation’s website. Note that extensions only extend the time you have to file. Taxes owed must still be paid by the original deadline.
Grace Dickinson is a writer for aarp.org who covers federal and state policy. She previously wrote for The Philadelphia Inquirer. Her work has also appeared on sites including HuffPost and Eater.
