Overview of Virginia Retirement Tax Friendliness
Social Security retirement benefits are not taxed in Virginia. Other types of retirement income, such as pension income and retirement account withdrawals, are deductible up to $12,000 for seniors. Property and sales tax rates are low.
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Annual Social Security Income
Annual Retirement Account Income
Year of Birth
Annual Income from Private Pension
Annual Income from Public Pension
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
Virginia Retirement Taxes
The Commonwealth of Virginia is known for its rich history (eight presidents have hailed from Virginia) and diverse landscape. It stretches from the Blue Ridge Mountains across the Chesapeake Bay to the Atlantic coast. Retirees in Virginia can enjoy sandy beaches, one of the state’s 400 golf courses and a hike in the mountains – all in one weekend.
Virginia also has relatively low retirement taxes. Social Security retirement benefits are not taxed in Virginia. Other types of retirement income, such as pension income and retirement account withdrawals, are deductible up to $12,000 for seniors. As described below, Virginia’s sales taxes and property taxes are also quite low.
A financial advisor in Virginia can help you plan for retirement and other financial goals. Financial advisors can also help with investing and financial plans, including taxes, homeownership, insurance and estate planning, to make sure you are preparing for the future.
Is Virginia tax-friendly for retirees?
Virginia has a number of exemptions and deductions that make the state tax-friendly for retirees. It exempts all Social Security income from the state income tax. It also provides seniors with a deduction of up to $12,000 per year against all other forms of retirement income. Seniors who rely solely on Social Security and other retirement income totaling less than $12,000 do not have to pay state taxes on retirement income in Virginia.
Senior homeowners fare well in Virginia, as the state has very low property tax rates. Likewise, the average state and local sales tax rate is 5.65%, among the lowest in the U.S.
Is Social Security taxable in Virginia?
The state of Virginia exempts all Social Security income from taxation. Some Social Security retirement benefits may still be taxed at the federal level, however.
Are other forms of retirement income taxable in Virginia?
Income from retirement accounts like a 401(k) or an IRA is taxable, as is any pension income. Much of that income is also deductible, however. Virginia offers an age deduction of up to $12,000 for persons age 65 and older. The deduction phases out by $1 for every $1 that the taxpayer's federal AGI surpasses $50,000 for single filers and $75,000 for married filers.
The deduction above can be applied to any retirement income, whether from a pension, 401(k) or IRA. If total retirement income is less than $12,000, it is essentially tax-free. Above that limit, income is taxed at the rates shown in the table below.
Income Tax Brackets
|Virginia Taxable Income||Rate|
|$0 - $3,000||2.00%|
|$3,000 - $5,000||3.00%|
|$5,000 - $17,000||5.00%|
How high are property taxes in Virginia?
The average effective property tax rate in Virginia is 0.80%. This is the 20th-lowest in the country. Property values in Virginia vary significantly between different parts of the state. In the cities and counties that are part of the Washington, D.C. metro area, median home values are typically higher than $200,000 and most homeowners pay over $2,000 annually in property taxes. In western Virginia, home values and property taxes are much lower, meaning most homeowners pay less than $1,000 each year.
What property tax relief is available to seniors in Virginia?
Most counties and independent cities in Virginia offer some form of property tax relief to seniors who own a home in their jurisdiction. Eligibility requirements vary by area, but, in general, seniors must be at least 65 years old. In many counties, low-income earners are entirely exempted from property taxes.
How high are sales taxes in Virginia?
Virginia has among the lowest sales taxes in the country. The general sales tax rate in the state is 5.3%. Additionally, some counties and independent cities collect a tax of 0.7%, which means the total sales tax paid in most of Virginia will be either 5.3% or 6%. Some places do have a 7% sales tax rate, though.
Groceries are not exempt from sales tax, but they do face a lower rate of 2.5%. Sales tax exemptions that could help retirees in Virginia include prescription drugs and most over-the-counter medicine.
What other Virginia taxes should I be concerned about?
Capital gains in Virginia are taxed as regular income. If, for example, you have an investment property that you intend to sell during retirement, it’s important to remember than any gains made on that property will face tax rates of up to 5.75%.