Virginia does not tax Social Security benefits

Virginia treats Social Security income differently from most other states. If Social Security is your only income source, you owe no Virginia state income tax on those benefits. This applies to retirement benefits, survivor benefits, and disability benefits paid by the Social Security Administration.

However, the federal government may still tax your Social Security depending on your total income. Virginia's exemption is a state-level protection only. You will still file a federal return if your combined income crosses the federal threshold, but your Virginia return will not include Social Security as taxable income.

Key Takeaways

  • Virginia exempts all Social Security benefits from state income tax, regardless of how much you receive.
  • The federal government may still tax your Social Security if your total income (including wages, pensions, and investment earnings) exceeds certain thresholds.
  • You must report your Social Security income on your federal tax return if you meet the filing threshold, even though Virginia does not tax it.
  • Other retirement income like pensions, IRAs, and 401(k) withdrawals are taxed by Virginia and may affect whether your Social Security is taxed federally.

How federal taxation of Social Security works

The federal government uses a formula based on your "combined income" to determine whether your Social Security is taxable. Combined income is your adjusted gross income plus nontaxable interest plus half of your Social Security benefits. If you are single and your combined income exceeds $25,000, up to 50 percent of your benefits become taxable. If it exceeds $34,000, up to 85 percent may be taxable.

For married couples filing jointly, the thresholds are $32,000 and $44,000. These thresholds have not changed since 1984, so more retirees cross them each year as wages and investment returns rise. The IRS publishes a worksheet in Publication 915 to calculate the exact amount, but many tax software programs do this automatically.

Virginia does not use this federal calculation. Because Virginia exempts Social Security entirely, your state return will be simpler — you straightforward do not report the Social Security income at all.

What counts as income alongside Social Security in Virginia

Virginia taxes wages, self-employment income, pensions, IRA distributions, 401(k) withdrawals, rental income, and capital gains. If you have any of these income sources, you must report them on your Virginia return. These other income sources do not affect whether Virginia taxes your Social Security (it never does), but they do determine whether you must file a Virginia return at all.

For 2024, Virginia requires you to file if your gross income exceeds $13,000 (single) or $26,000 (married filing jointly), regardless of whether any of that income is Social Security. If you have a pension and Social Security, for example, you file based on the pension amount, and you report the pension but not the Social Security.

How Virginia's exemption affects your federal taxes

Virginia's decision to exempt Social Security does not shield you from federal taxation. The two tax systems are separate. You may owe nothing to Virginia but still owe federal tax on part of your Social Security if your combined income is high enough.

This matters most if you have a pension, investment income, or a working spouse. A married couple with a $40,000 pension and $20,000 in Social Security has a combined income of $50,000 (using the federal formula), which pushes them well into the range where Social Security becomes taxable federally. Virginia will tax the $40,000 pension but not the $20,000 Social Security. The IRS will tax part of the Social Security on top of the pension.

Reporting Social Security on your Virginia return

You do not report Social Security on your Virginia return at all. Virginia Form 760 (the state income tax return) has no line for Social Security income. If you receive a Form SSA-1099 from Social Security, you use it only for your federal return.

When you file your Virginia return, you report only the income Virginia taxes: wages, pensions, IRA distributions, rental income, and so on. This makes the Virginia portion of your tax filing straightforward. Many people find that filing Virginia taxes is simpler than filing federal taxes for this reason.

Other Virginia tax breaks for retirees

Beyond the Social Security exemption, Virginia offers a retirement income deduction for people over 59½. If you receive a pension, IRA distribution, or 401(k) withdrawal, you may deduct up to $12,000 of that income per year (as of 2024; the limit adjusts annually). This deduction applies to earned retirement income but not to wages from continued employment.

Virginia also exempts military retirement pay from state income tax entirely, similar to the Social Security exemption. If you are a military retiree receiving both a military pension and Social Security, neither is taxed by Virginia.

When you need to file both Virginia and federal returns

You may need to file a Virginia return even if you do not owe federal tax. Virginia's income threshold is lower than the federal threshold in some cases. If you have a pension of $15,000 and Social Security of $18,000, you owe nothing to the IRS (your income is below the federal threshold) but must file a Virginia return because your pension alone exceeds Virginia's $13,000 threshold.

Conversely, you may owe federal tax but not file a Virginia return. If you have only Social Security income, you file a federal return if your combined income exceeds the federal threshold, but you do not file a Virginia return because Virginia has no tax on Social Security and no other income to report.

Frequently Asked Questions

If I only receive Social Security, do I file a Virginia tax return?

No. Virginia does not tax Social Security, and if that is your only income, you have no other income to report to Virginia. You may still need to file a federal return depending on your combined income and filing status, but Virginia requires nothing from you.

Does Virginia tax my military retirement pension?

No. Virginia exempts military retirement pay from state income tax entirely. If you receive both military retirement and Social Security, neither is taxed by Virginia. You may still owe federal tax on both, depending on your total income.

I have a pension and Social Security. How much Virginia tax do I owe?

Virginia taxes only the pension, not the Social Security. The amount depends on your pension amount and Virginia's tax brackets for your filing status. You can estimate using Virginia's tax calculator on the Department of Taxation website, or a tax preparer can calculate it for you.

Can I deduct part of my retirement income in Virginia?

Yes, if you are over 59½. You may deduct up to $12,000 per year of retirement income (pensions, IRA distributions, 401(k) withdrawals). Social Security is already exempt, so the deduction does not explore to it. The deduction limit adjusts each year.

My Social Security is not taxed in Virginia, but I owe federal tax on it. Why?

Virginia and the federal government use different rules. Virginia exempts all Social Security. The IRS taxes it if your combined income exceeds $25,000 (single) or $32,000 (married filing jointly). You can owe federal tax while owing nothing to Virginia.