Tax laws in Virginia are a bit complicated, but you’ll find the state rates reasonable once you break it all down. Below, we explain various Virginia state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.
For information regarding taxes in other states, see Retirement Taxes by State.
Virginia Tax Rates
|State Sales Tax||5.3%|
|Avg State/Local Sales Tax||5.75%|
|Gas Tax||$0.28 per gallon|
|Diesel Tax||$0.29 per gallon|
|Cigarette Tax||$0.60 per pack|
|Effective Tax Rate:||5.26%|
|Social Security Tax||None|
|Federal Income Tax Deduction:||None|
Virginia State Taxes Explained
Virginia Sales Tax
5.3% state levy, plus a local rate of up to 1.7%. The state repealed the grocery tax (1.5%) in 2023, but local taxes will still apply.
Vehicles are taxable under a special 4.15% excise tax. Personal hygiene items are taxed at a reduced rate.
Virginia Income Taxes
Top tax rate of 5.75% (on taxable income over $17,000).
Virginia Property Taxes
Virginia’s cities, counties and towns administer property taxes, which are based on 100% of fair market value. Tangible personal property is also taxed at the local level and is based on a percentage of the original cost. Virginia’s effective property tax rate is 0.82%. For example, you’d owe $2,234 annually on a home worth $273,100.
Many Virginia counties, cities and towns provide tax relief programs for seniors and people with disabilities. These programs allow for an exemption, deferral or both. The tax break applies to property taxes on real estate domiciles and manufactured homes. The home must be owned and occupied as the sole dwelling of a person 65 years of age or older. Income and net worth limits apply depending on the community. Contact local tax officials for information. There are no adjustments at the state level.
The Virginia Livable Home Tax Credit (LHTC) applies to purchases or construction of a home to meet the eligibility guidelines established by the Virginia Department of Housing and Community Development. Tax credits are available for up to $5,000.
Virginia Retirement Taxes
Virginia law exempts Social Security benefits from taxation. Retired servicemembers aged 55 and older can subtract up to $20,000 in military benefits in 2023, up from $10,000 in 2022.
The Virginia Age Deduction is available to those born on or before January 1, 1955. If you or a spouse were born on or before January 1, 1939, you may claim a $12,000 age deduction. Those born on or between January 2, 1939, and January 1, 1955, are eligible for an income-based age deduction based on adjusted federal adjusted gross income (AFAGI). AFAGI is equal to federal adjusted gross income, modified for any fixed-date conformity adjustments, reduced by taxable Social Security benefits.
The age deduction is subject to various reductions, which is explained on the Virginia tax subtractions page. The Virginia Spouse Tax Adjustment (STA) allows married couples to file joint returns without paying higher taxes than if they had filed separately.
You can also deduct the total amount of qualified medical and dental expenses that exceed 10% of your federal adjusted gross income.
Those who are age 66 and older with annual earned income of at least $20,000 and federal adjusted gross income under $30,000 for the taxable year may be able to deduct the cost of prepaid funeral insurance or medical or dental insurance premiums.
If you do not claim a federal deduction for long-term care insurance premiums, you can take a deduction on your Virginia tax return.
Virginia Estate and Inheritance Taxes
There is no estate or inheritance tax in Virginia.
For further information, visit the Virginia Department of Taxation.