Virginia does have a state income tax

Virginia charges a state income tax on wages, investment income, and other earnings. The tax rate ranges from 2% to 5.75% depending on your income bracket, and it applies to all residents and anyone earning money within the state. Unlike some states, Virginia does not offer a flat tax rate — the more you earn, the higher percentage you pay.

The state collects this tax through withholding from paychecks, quarterly estimated payments if you're self-employed, and annual tax returns filed with the Virginia Department of Taxation. If you work in Virginia but live in another state, you may owe Virginia tax on that income, though your home state may offer a credit to avoid double taxation.

Key Takeaways

  • Virginia's income tax brackets range from 2% on the lowest earners to 5.75% on the highest, making it a progressive tax system.
  • The state taxes wages, salaries, interest, dividends, and capital gains, though some retirement income may be partially exempt.
  • Your employer typically withholds Virginia income tax from each paycheck based on the W-4 form you complete.
  • If you're self-employed or have investment income not subject to withholding, you may need to pay estimated taxes quarterly to avoid penalties.

How Virginia's tax brackets work

Virginia uses a progressive tax system, meaning your income is taxed at different rates depending on which bracket it falls into. For the 2024 tax year, the brackets are 2%, 3%, 5%, and 5.75%. You do not pay the top rate on all your income — only the portion that falls within each bracket is taxed at that rate.

The exact income thresholds that trigger each bracket change yearly and differ based on your filing status (single, married filing jointly, head of household, or married filing separately). The Virginia Department of Taxation publishes updated brackets each year on their website. Because brackets shift annually, your tax bill can change even if your income stays the same.

What income Virginia taxes

Virginia taxes most forms of income: wages and salaries from employment, self-employment income, interest earned on savings accounts and bonds, dividends from stocks, capital gains from selling investments, rental income, and income from retirement accounts when you withdraw it. If you receive a W-2 from an employer, that income is taxable. If you receive a 1099 form for freelance or contract work, that is also taxable.

Some income is partially or fully exempt. Military pensions are excluded from Virginia income tax, and certain retirement income may may have access to for a deduction if you meet age and income requirements. Social Security benefits are not taxed by Virginia. If you are unsure whether a specific type of income you received is taxable, the Virginia Department of Taxation website has a searchable database of income types and their tax treatment.

How withholding works on your paycheck

When you start a job in Virginia, your employer asks you to complete a Virginia W-4 form (separate from the federal W-4, though many employers use a combined form). This form tells your employer how much Virginia income tax to withhold from each paycheck. The amount withheld depends on your filing status, the number of dependents you claim, and any additional withholding you request.

Your employer sends the withheld tax to the Virginia Department of Taxation on your behalf throughout the year. When you file your annual tax return, the total withheld is compared to the total tax you actually owe. If too much was withheld, you receive a refund. If too little was withheld, you owe the difference. You can adjust your withholding at any time by submitting a new W-4 to your employer — for example, if you get a second job or your spouse starts working.

Self-employment and estimated tax payments

If you are self-employed, work as a contractor, or have significant income not subject to withholding, Virginia requires you to pay estimated taxes quarterly. These are payments you make directly to the state four times a year (typically in April, June, September, and January) based on your expected annual income and tax liability.

You calculate estimated taxes using Virginia Form 765 and pay them online through the Virginia Department of Taxation website, by mail, or through an electronic payment system. If you do not pay enough in estimated taxes throughout the year, you may owe a penalty when you file your annual return, even if you ultimately pay all the tax you owe. Many self-employed people work with a tax professional to calculate the correct quarterly amount.

Filing your Virginia tax return

Most Virginia residents file their state income tax return using Form 760 (the Virginia Individual Income Tax Return). You file this form by the same important date as your federal return — typically April 15 of the following year, though the important date shifts if April 15 falls on a weekend or holiday. You can file electronically through the Virginia Department of Taxation website or by mail.

When you file, you report all income earned during the year, claim any deductions or credits you are may have access to to, and calculate your total tax liability. Common deductions include the standard deduction (which varies by filing status and age) and itemized deductions if you own a home or have significant charitable donations. Virginia also offers credits for things like child and dependent care expenses, education costs, and property taxes paid.

Tax credits and deductions available in Virginia

Virginia offers several tax credits that reduce the amount of tax you owe dollar-for-dollar. The Earned Income Tax Credit (EITC) is available to lower-income workers and is often the largest credit. The Child and Dependent Care Credit helps offset childcare costs. The Education Credits (including the American Opportunity Credit and Lifetime Learning Credit) reduce tax for education expenses. Property Tax Relief Credit is available to low-income seniors and disabled individuals.

Beyond credits, Virginia allows deductions that reduce your taxable income. The standard deduction is the simplest route for most filers — you subtract a set amount based on your age and filing status before calculating tax. If you own a home and pay mortgage interest and property taxes, or if you have large charitable donations, itemizing deductions on Schedule A may save you more tax than the standard deduction. The Virginia Department of Taxation publishes a guide each year listing all available credits and deductions with income limits and requirements.

Frequently Asked Questions

Do I owe Virginia income tax if I live in another state but work in Virginia?

Yes, Virginia taxes income earned within the state regardless of where you live. However, your home state may also tax that income. Most states offer a credit for taxes paid to other states to prevent double taxation, so you would file returns in both states and claim a credit on your home state return. Check with your home state's tax authority for their specific rules.

Is Social Security taxed by Virginia?

No, Virginia does not tax Social Security benefits. However, if you have other income (wages, pensions, investments), that income is still taxable. Some retirement pensions are partially exempt from Virginia tax if you meet age and income requirements — check the Virginia Department of Taxation website for current exemption amounts.

What happens if I do not withhold enough tax during the year?

If your withholding is too low, you will owe the difference when you file your return. Virginia may also charge a penalty for underpayment of estimated tax, though penalties are waived if you paid at least 90% of your current year tax or 100% of your prior year tax. You can avoid this by adjusting your W-4 or making quarterly estimated payments.

Can I file my Virginia return electronically?

Yes, the Virginia Department of Taxation accepts electronic filing through their website. You can also use tax software that supports Virginia returns or work with a tax professional. Electronic filing is faster than mailing a paper return and you receive confirmation of receipt when ready.

What is the important date to file my Virginia tax return?

The important date is the same as the federal important date, typically April 15 of the year following the tax year. If you need more time, you can request an extension, though an extension to file does not extend the important date to pay any tax you owe. Extensions are requested on Form 4868 (federal) and automatically explore to Virginia as well.