State-by-State Guide to Taxes on Retirees
Tool | December 2021

Virginia State Tax Guide for Retirees

State tax rates and rules for income, sales, property, estate, and other taxes that impact retirees.


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The Bottom Line
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For retirees, the Old Dominion offers a few tax breaks here and a few tax breaks there to create a friendly overall tax environment. For state income taxes, Virginia doesn't tax Social Security benefits, and residents 65 and older can deduct up to $12,000 per person of other income, subject to income-eligibility limits.

Another break comes in the form of low sales tax rates. Virginia's average combined state and local rate of 5.75% is the 11th-lowest in the nation. Clothing and groceries (reduced rate) are taxable, though (the state tax on groceries is repealed in 2023).

Property taxes are below average, too. Local governments can provide additional tax breaks for seniors as well.

Income Tax Range

Low: 2% (on up to $3,000 of taxable income)

High: 5.75% (on taxable income over $17,000)

Taxation of Social Security Benefits

Social Security benefits are not taxed by the state.

Tax Breaks for Other Retirement Income

Income from a retirement plan may be deductible if contributions to the plan were previously taxed in another state.

In addition, taxpayers age 65 and older can claim a deduction of up to $12,000. For taxpayers born after January 1, 1939, the deduction is completely phased-out for single taxpayers with a modified adjusted gross income of $62,000 or more and married taxpayers with a modified AGI of $87,000 or more.

Beginning in 2022, veterans 55 years of age and older can deduct up to $10,000 of military retirement income and other military benefits. The deduction is increased to $20,000 for 2023, $30,000 for 2024, and $40,000 for 2025 and thereafter. Congressional Medal of Honor recipients can exclude all income from a military retirement plan.

Railroad Retirement benefits are also exempt.

Sales Tax

5.3% state levy, which includes a 1% tax allocated to local governments. Some local governments also impose additional taxes of up to 1.7%, making the average combined state and local rate 5.75%, according to the Tax Foundation.

Groceries: Taxable (1.5% state rate, plus 1% local tax)
Clothing: Taxable
Motor Vehicles: Exempt from ordinary sales tax, but taxable under special 4.15% excise tax.
Prescription Drugs: Exempt

NOTE: The state sales tax on groceries is repealed starting in 2023. Local taxes on groceries will still apply.

Real Property Taxes

In Virginia, the median property tax rate is $815 per $100,000 of assessed home value.

A county, city, or town may enact a program for senior citizens and disabled persons allowing for exemption, deferral or a combination of both for property taxes on homes owned and occupied as the sole dwelling of a person 65 or older. Annual family income is generally limited to $50,000 to qualify for a program, but it may be higher in certain Northern Virginia communities. In addition to annual family income limits, net worth limits may apply. There are no adjustments at the state level.

Annual Car Taxes and Fees

An annual vehicle property tax based on the car's value is imposed. Localities assess vehicles and administer the tax.

Estate and Inheritance Taxes

No estate or inheritance tax.