9 Virginia Tax Breaks Retirees Forget to Claim Every Year

Virginia will erase up to 100% of a retiree’s real estate tax bill in some cities.

Some eligible homeowners never file the one form that unlocks it.

The commonwealth buries its best retiree tax breaks inside subtraction lines and local ordinances nobody hands you at the DMV or the courthouse, so you have to go looking for them yourself.

These are the Virginia tax breaks some retirees don’t realize they can claim every year.

Note: This is general information, not financial or tax advice. Tax rules and dollar amounts are subject to change. Confirm the current details with a professional.

1. Skipping the Age Deduction

Turn 65 anywhere in Virginia, and the state lets you subtract up to $12,000 from your taxable income, no separate application required.

It’s just a line on your state return.

Married couples where both spouses are 65 or older can each claim the full amount, for up to $24,000 off their combined income.

Higher earners lose some of it, though.

Virginia Tax shrinks the deduction by a dollar for every dollar your adjusted income tops $50,000 for a single filer or $75,000 for a married couple.

Retirees born on or before Jan. 1, 1939, skip that math altogether and keep the full $12,000 no matter their income.

One catch trips people up every filing season: Claim this deduction, and you give up the disability income subtraction on the same return.

2. Missing the Senior Property Break

Virginia authorizes every county and city to wipe out or defer part of a homeowner’s real estate tax once they turn 65 or become permanently disabled, under a state law that’s been on the books since the 1970s.

The catch is that nobody applies it automatically.

Virginia Beach, for example, exempts qualifying homeowners entirely from real estate tax when household income stays under $87,419, with a partial freeze available up to a higher income line.

Net worth has to stay under $350,000, not counting the home itself and up to 10 acres under it.

Fairfax, Loudoun, Arlington, and dozens of other localities run their own versions with different income and asset caps, so a retiree in Roanoke and a retiree in Chesapeake qualify under completely different numbers.

You apply through your county or city Commissioner of the Revenue, usually by a spring deadline, and miss that window and you wait a full year.

3. Undercounting Military Retirement Pay

Military retirement income counts as taxable in Virginia by default, the same as any pension.

But veterans can subtract up to $40,000 of it on their 2026 return, a figure that’s risen every year since 2023 as the state phased the break in.

That’s real money.

Survivor Benefit Plan payments to a veteran’s spouse qualify too, and a married couple who both draw military pensions can each claim their own $40,000, not one combined cap.

One group skips the cap altogether.

Medal of Honor recipients can subtract every dollar of military retirement pay from their Virginia return, with no ceiling at all.

Thrift Savings Plan (TSP) withdrawals don’t count toward this subtraction, so a retiree pulling from a TSP account still owes tax on that piece.

4. Assuming Virginia Taxes Social Security

Virginia never touches your Social Security check.

The state fully exempts Social Security benefits and Tier 1 Railroad Retirement Act benefits from its income tax, per Virginia Tax’s own subtraction rules, with no income cap and no phase-out to worry about.

Here’s where retirees trip, though.

If the Internal Revenue Service (IRS) taxes a portion of your benefits at the federal level, that taxed amount lands in your federal adjusted gross income, and Virginia’s return starts from that same number.

Skip the subtraction line, and you pay state tax on income Virginia never meant to touch.

Some retirees moving down from Maryland or Pennsylvania, states that tax Social Security under certain conditions, carry that habit straight into their new Virginia return and never unlearn it.

5. Overlooking the Vehicle Tax Break

Virginia taxes cars and trucks as personal property every single year, and that bill lands separately from anything on your income tax return.

Most cities and counties run a second relief program on top of the general vehicle tax rules, aimed only at elderly and disabled residents.

Alexandria, for one, exempts a qualifying resident's vehicle from personal property tax entirely when combined household income stays under $20,000 and net worth under $75,000.

Virginia Beach takes a different approach, dropping the rate on a qualifying vehicle to a fraction of a cent per hundred dollars of value instead of exempting it outright.

Only one vehicle qualifies per household, and you have to reapply most years.

A retiree with a paid-off sedan and a spouse's older pickup often gets to pick which one carries the relief, so run the numbers on both before you file.

6. Ignoring the Disability Subtraction

Retirees who left the workforce early on permanent and total disability can subtract up to $20,000 of that income from their Virginia return, the same subtraction list that covers the age deduction.

That's $8,000 more than the age deduction most retirees default to.

You can't stack the two, though.

Virginia forces a choice between the age deduction and the disability income subtraction, and many eligible retirees default to age 65 out of habit instead of running the math on which one saves more.

A 62-year-old who retired on permanent disability and assumes no break exists before 65 leaves the biggest subtraction on the table.

7. Passing on Long-Term Care Premiums

Buy a long-term care insurance policy in Virginia, and the full premium comes off your state taxable income.

Not a percentage, not a cap.

The whole amount, as long as you didn't already deduct those premiums on your federal return.

That last part matters because most retirees who itemize federally already wrote off medical expenses, including long-term care premiums, once those costs cleared the federal threshold.

Claim the same premiums on your federal Schedule A, and Virginia disallows the state deduction completely, so a retiree who takes the standard deduction federally is often the one who benefits here.

8. Missing the New-Resident Break

Retirees who moved to Virginia from another state carry an old tax bill nobody warns them about.

If you paid tax on contributions to a pension, an individual retirement account (IRA), or a deferred compensation plan back when you lived in that other state, Virginia doesn't tax the same money twice when you finally withdraw it.

The subtraction applies to qualifying distributions from a 401(k), an IRA, a 457 plan, or a federal retirement program, but only for the portion tied to contributions that state already taxed.

You need records from decades back to prove it.

A retiree who moved from New Jersey or California, states that tax retirement contributions differently than Virginia does, often has no idea this subtraction exists until a tax preparer asks the right question.

9. Losing the Funeral Deduction

Virginia allows a narrow deduction for prepaid funeral insurance premiums, plus medical and dental insurance premiums, but the eligibility window is tight enough that most retirees never hear about it.

You have to be 66 or older.

Your earned income needs to hit at least $20,000 for the year, and your federal adjusted gross income can't exceed $30,000.

That combination rules out most fully retired filers, but it fits one group well: A retiree working part time past 66 on a modest paycheck, paying into a prepaid funeral policy and a private medical plan at the same time.