Does Virginia Tax Retirement Income? What Retirees Keep in 2026

Does Virginia tax retirement income? Yes, but only part of it, and not the part most retirees worry about first.

Your Social Security stays untouched.

Pensions, 401(k) withdrawals, and traditional IRA distributions are a different story.

Virginia taxes those the same way it taxes a paycheck, at rates running from 2% up to 5.75%.

An age deduction worth up to $12,000 lowers that bill once you turn 65, and veterans get a separate break on military retirement pay.

How much you keep comes down to your birth year, your income, and whether that check comes from a pension or from the Pentagon.

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

How Virginia Taxes Retirement Income

Virginia treats a pension check or an individual retirement account (IRA) withdrawal the same way it treats a paycheck.

Traditional 401(k) withdrawals, IRA distributions, and most pension income all count as taxable income the moment you take them.

Roth IRA withdrawals are the exception, since you already paid the tax when that money went in.

That bill’s already settled.

Virginia’s income tax runs through four brackets, from 2% at the bottom up to 5.75% at the top.

Every filer can also claim an $8,750 standard deduction, or $17,500 for a married couple filing jointly, before any of those brackets apply.

That standard deduction shrinks the taxable slice of a pension or 401(k) withdrawal before the graduated rates even start.

Social Security Stays Untouched

Social Security is the one retirement check Virginia leaves alone completely.

Whatever portion of your benefit the federal government taxes, Virginia lets you subtract that amount right back out on your state return.

Every dollar of it.

Tier 1 Railroad Retirement gets the same treatment, along with any Social Security disability or survivor benefits included in your federal income.

So a retired teacher living on a pension and a widow living on survivor benefits face very different Virginia tax bills, even if their checks land at the same size.

Age Deduction Trims the Bill at 65

Turning 65 unlocks a break that shrinks the taxable slice of a pension or IRA withdrawal even further.

If you were born on or before January 1, 1939, Virginia lets you subtract $12,000 with no income limit at all.

Almost nobody qualifies for that clean version anymore.

For everyone born after that date, the $12,000 deduction starts shrinking once your adjusted federal income passes $50,000 filing single or $75,000 filing jointly.

Cross that line by $12,000 or more.

The deduction disappears completely.

A single retiree turning 68 this year with $56,000 in adjusted income sits $6,000 over that line.

So their $12,000 deduction shrinks to $6,000.

It’s worth checking either way.

Military Retirement Gets Its Own Break

Veterans drawing military retirement pay get a subtraction Virginia keeps separate from the age deduction.

You can subtract up to $40,000 of eligible military retirement pay from your Virginia return.

Both spouses can claim it.

A married couple who each draw a military pension can each subtract up to that amount, doubling the break on one joint return.

You can claim the military subtraction and the age deduction on the same return too, since Virginia allows both.

It Doesn’t Matter Where You Earned the Pension

A federal worker who retires from a job in Maryland and then moves to Virginia doesn’t keep paying Maryland tax on that pension.

A federal law caps this at one state: Wherever you live when the check arrives is the only place allowed to tax it.

Once you become a Virginia resident, Virginia is that state, regardless of which state you spent your career in.

One state, one bill.

The rule covers qualified pensions, 401(k) and IRA plans, and government retirement systems.

So a retiree moving to Virginia from a heavier-tax state trades that old bill for Virginia’s rules instead of paying both.

How Virginia Stacks up Against North Carolina

Retirees weighing a move over the state line often stack Virginia's rules against North Carolina's.

North Carolina skips the age deduction Virginia offers and taxes 401(k) withdrawals and pensions at a flat 3.99% rate no matter how old you are.

No exceptions for age.

North Carolina exempts Social Security too, the same as Virginia.

So that part of the math matches on both sides of the border.

The difference shows up on a big pension or a large 401(k) withdrawal.

A Virginia retiree 65 and older can shave up to $12,000 off that income with the age deduction alone, something North Carolina's flat tax doesn't offer at any age.

Neither approach beats the other for every retiree.

It comes down to how much of your income comes from a pension versus a Social Security check, and how close you sit to Virginia's income limits.

FAQ

Quick answers to what Virginia retirees ask most about state taxes on retirement income.

Does Virginia tax Social Security benefits?

No. Virginia exempts Social Security and Tier 1 Railroad Retirement benefits from state income tax, even the portion the federal government taxes.

What is Virginia's age deduction for retirees?

Retirees 65 and older can subtract up to $12,000 from their taxable income. The full amount goes to anyone born on or before January 1, 1939, and it shrinks for everyone else once adjusted federal income passes $50,000 single or $75,000 married.

Does Virginia tax pensions and 401(k) withdrawals?

Yes. Virginia taxes pension income, 401(k) withdrawals, and traditional IRA distributions the same as wages, at graduated rates from 2% to 5.75%, before any age deduction or standard deduction applies.

Is military retirement pay taxed in Virginia?

Veterans can subtract up to $40,000 of eligible military retirement pay from their Virginia return, and both spouses in a married couple can each claim that amount separately.

Does Virginia tax Roth IRA withdrawals?

No. Qualified Roth IRA withdrawals aren't taxed by Virginia or the federal government, since that money was already taxed before it went into the account.