Virginia charges state income tax on wages, investment income, and other earnings

Yes, Virginia has a state income tax. Unlike a handful of states that rely entirely on sales tax or other revenue sources, Virginia taxes your income directly. The state uses a progressive tax system, meaning the rate increases as your income rises. You pay Virginia state income tax on wages from a job, self-employment income, interest and dividends, retirement distributions, and other sources — much like the federal income tax, but at lower rates and with different rules about what counts as taxable income.

Virginia's state income tax is separate from federal income tax. When you file your federal return with the IRS, you also file a Virginia return with the Virginia Department of Taxation. The two systems use different tax brackets, different deductions, and different definitions of what income is taxable. Understanding how Virginia's system works helps you plan for what you actually owe and avoid underpaying throughout the year.

Key Takeaways

  • Virginia's state income tax rates range from 2% on the lowest bracket to 5.75% on the highest, and the brackets change each year based on inflation.
  • You must file a Virginia return if you earned income in the state, even if you owe no tax, and the filing important date matches the federal important date of April 15.
  • Virginia allows a standard deduction that reduces your taxable income, and the amount depends on your age and filing status.
  • If your employer withholds too much Virginia tax from your paycheck, you receive a refund when you file; if too little is withheld, you owe the difference.

Virginia's tax brackets and rates for 2024

Virginia uses six tax brackets. The lowest bracket starts at 2% and applies to the first portion of your income; each bracket above it increases the rate until you reach the top bracket of 5.75%. The exact dollar amounts where each bracket begins and ends change every year because Virginia adjusts them for inflation. For example, the bracket thresholds in 2024 differ from 2023, and 2025 thresholds will differ again.

Because Virginia's brackets shift annually, you cannot rely on last year's numbers when planning your taxes. The Virginia Department of Taxation publishes updated brackets each January on its website. If you are self-employed or have income that is not subject to withholding, checking the current brackets helps you estimate what you will owe and whether you need to make quarterly estimated tax payments to avoid a large bill at filing time.

The progressive structure means you do not pay the top rate on all your income — only on the portion that falls into the highest bracket. A person earning $100,000 does not pay 5.75% on the full amount; instead, they pay 2% on the first bracket, then 3% on the next, and so on, with 5.75% explore only to income above the threshold for that bracket.

Standard deduction and personal exemptions

Virginia allows a standard deduction that reduces the income you actually pay tax on. The amount depends on your filing status (single, married filing jointly, head of household, and so on) and your age. Taxpayers age 65 and older receive a higher standard deduction than younger filers. Like the tax brackets, the standard deduction amounts change each year for inflation.

Virginia does not allow a personal exemption for yourself or your dependents the way the federal system once did. Instead, you claim a standard deduction based on your situation, and that is the main way you reduce your taxable income before explore the tax rates. If your total income is below the standard deduction for your filing status, you may owe no Virginia income tax at all, even though you still must file a return if you had income in the state.

How withholding works and what to do if too much or too little is taken

When you work for an employer in Virginia, your employer withholds state income tax from your paycheck based on the W-4 form you complete. The W-4 tells your employer how much to withhold by asking about your filing status, number of dependents, and other income. If you fill it out accurately, the amount withheld throughout the year should roughly match what you owe when you file your return in April.

If your employer withholds too much, you receive a refund when you file. If too little is withheld, you owe the difference. You can adjust your withholding at any time by submitting a new W-4 to your employer — you do not have to wait until the next year. This is useful if your life changes (marriage, a second job, a child born) or if you realize after filing that you are consistently getting a large refund or owing a large amount.

Self-employed people and those with income not subject to withholding (such as rental income or investment gains) may need to pay estimated tax quarterly. Virginia requires estimated payments if you expect to owe $150 or more when you file. You make four payments throughout the year on dates set by the Virginia Department of Taxation, rather than paying everything at once in April.

What income is taxable in Virginia

Virginia taxes most types of income: wages, salaries, tips, self-employment income, interest, dividends, capital gains, retirement distributions, and income from rental property or a business. However, some income is excluded. For example, certain retirement income may be partially or fully excluded depending on your age and the source of the income. Military retirement pay receives special treatment, and some federal pensions have exclusions as well.

Virginia also excludes certain types of income entirely. Social Security benefits are not taxable in Virginia (though they are taxable federally in some cases). Some scholarships and educational grants are excluded. If you receive income from sources outside Virginia, you generally do not owe Virginia tax on it unless you are a Virginia resident. Understanding which income counts helps you know whether you need to file and what your actual tax liability is.

Filing important date and where to file your return

Virginia's income tax return is due on the same date as your federal return: April 15 (or the next business day if April 15 falls on a weekend or holiday). You file your Virginia return with the Virginia Department of Taxation, not with the IRS. You can file on paper by mailing Form 760 (Virginia Individual Income Tax Return) to the address listed in the instructions, or you can file electronically through the department's website or through tax software.

If you need more time, you can request an extension, which gives you until October 15 to file. An extension delays your filing important date but does not delay your payment important date — if you owe tax, it is still due by April 15, and interest accrues on any unpaid amount after that date. Filing electronically is usually faster and reduces the chance of errors, and the Virginia Department of Taxation offers free filing options for lower-income residents.

How Virginia income tax differs from federal income tax

Virginia's tax rates are lower than federal rates, and the brackets are different. Virginia's top rate is 5.75%, while the federal top rate is 37%. Virginia's standard deduction amounts differ from federal amounts. Some income that is taxable federally may not be taxable in Virginia, and vice versa. For example, Virginia excludes certain military retirement income that the federal government taxes.

The two systems also have different rules about deductions. Virginia does not allow you to deduct state and local taxes (SALT) the way the federal system does, though federal law caps that deduction anyway. Virginia has its own rules about what counts as a dependent and how to treat certain types of income. Because the systems are separate, you may owe Virginia tax even if you owe no federal tax, or you may owe federal tax but no Virginia tax.

Frequently Asked Questions

Do I have to file a Virginia return if I did not earn much income?

If you earned any income in Virginia, you must file a return even if you owe no tax. The threshold for owing tax is the standard deduction for your filing status, but the filing requirement is lower. Check the Virginia Department of Taxation website for the current filing threshold, which changes yearly.

What if I moved to Virginia partway through the year?

You owe Virginia tax only on income earned while you were a Virginia resident. If you moved in June, you report income from June onward on your Virginia return and income from January through May on your previous state's return (or federal only if you had no state). Your employer's W-4 withholding may not account for this split, so you may need to adjust when you file.

Can I deduct federal income tax paid from my Virginia taxable income?

No. Virginia does not allow a deduction for federal income tax. You calculate Virginia tax on your Virginia taxable income, which is based on your federal adjusted gross income but with Virginia-specific adjustments and deductions.

What happens if I underpay my estimated taxes?

The Virginia Department of Taxation charges interest on any tax owed after April 15. If you significantly underpay, you may also owe a penalty. Making quarterly estimated payments on time helps you avoid both. If you realize partway through the year that you will underpay, you can catch up by increasing withholding on any W-2 wages you earn.

Does Virginia tax income earned in other states?

No. If you are a Virginia resident but earned income in another state, you owe tax to that state on the income earned there. Virginia does not tax income you earned outside the state. You report only Virginia-source income on your Virginia return.