Does Virginia Tax Social Security or Pensions?

Virginia does not tax your Social Security. Most other retirement income, though, is fair game. The Virginia retirement income tax falls on pensions, IRA withdrawals, and 401(k) distributions, softened by an Age Deduction worth up to $12,000 for people 65 and older.1

This guide breaks down what Virginia taxes, what it leaves alone, how the Age Deduction shrinks as income climbs, and who is exempt from that phase-out entirely.

Virginia Retirement Income Tax at a Glance

Here is what Virginia does with each common source of retirement money.

Social Security is the clean win. Whatever the IRS taxes federally, Virginia subtracts back out.1 So your benefit lands in your account untouched by the state. If you worked for the railroad, the same rule covers your Tier 1 Railroad Retirement benefits: Virginia does not tax them either.1

Everything else is ordinary income to Virginia. A pension check, an IRA withdrawal to cover assisted living, a 401(k) distribution: all of it counts. The Age Deduction is the main relief, and it is the part worth understanding.

Why does this distinction matter so much? For most retirees, Social Security is the steadiest piece of monthly income. Knowing the state never touches it lets you budget that money with certainty. The variable piece is everything you draw from savings, and that is where Virginia's rules do their work.

Virginia Retirement Income Tax: How It Works

Virginia runs a graduated income tax. The rate climbs from 2% on the first slice of income to 5.75% at the top.1 Retirement income that is not exempt gets taxed on that same scale, stacked with any other income you report.

The relief built for seniors is the Age Deduction. It is worth up to $12,000 per qualifying taxpayer who is 65 or older.1 But how much you actually get depends on when you were born.

If you were born on or before January 1, 1939, you get the full $12,000. No income test.1 Your income could be high or low; the deduction stays at $12,000.

If you were born after that date, the $12,000 shrinks as your income grows. The deduction drops by $1 for every $1 your adjusted federal adjusted gross income exceeds $50,000 if you file single, or $75,000 if you file married.1 Cross those thresholds by $12,000 or more, and the deduction is gone.

Work an example. A single filer born in 1955 has an adjusted federal adjusted gross income of $56,000. That is $6,000 over the $50,000 line. So the $12,000 deduction is cut by $6,000, leaving a $6,000 Age Deduction.1 The figures here are illustrative, not a prediction of your own return.

The lesson is simple. The Age Deduction is most valuable to lower-income retirees and to the oldest Virginians born before 1939. Higher earners born later may see little or none of it.

One detail trips people up. The phase-out is keyed to adjusted federal adjusted gross income, a Virginia-specific figure built off your federal AGI. It is not your taxable income after deductions. So a year with a big IRA withdrawal can quietly erode your Age Deduction even if your taxable income looks modest after other write-offs. Plan around the AGI figure, not the bottom line of your return.

Virginia adds a second subtraction for military benefits, and it carries no age test. Up to $40,000 of eligible military benefits can be subtracted for tax year 2025 and later, and the statute allows that subtraction for military benefits received by an individual of any age.1 A twenty-year retiree who separated in their forties qualifies on the same terms as one who separated at sixty.

Who counts is broader than retirement pay alone. Virginia defines military benefits for this subtraction as military retirement income received for service in the Armed Forces, qualified military benefits received under Section 134 of the Internal Revenue Code, benefits paid to the surviving spouse of a veteran under the Survivor Benefit Plan program established by the U.S. Department of Defense, and military benefits paid to the surviving spouse of a veteran.1 So a surviving spouse drawing Survivor Benefit Plan benefits is eligible for the subtraction in their own right, not only the veteran. One caution: the Department of Taxation notes that qualified military benefits such as Dependency and Indemnity Compensation are not included as income on the federal and Virginia returns, so there is nothing there to subtract.1

The military benefits subtraction is separate from the Age Deduction. Virginia allows no subtraction, though, where a credit, exemption, subtraction, or deduction is claimed for the same income under another provision of Virginia or federal law, so confirm with the Department of Taxation before counting two breaks against the same dollars.1 VA's FY2025 state summary for Virginia, a modelled estimate from NCVAS, puts the state's veteran population at 670,834 for 2025,2 so this break reshapes the tax math for a lot of retired service members.

The Age Deduction is Virginia's main age-based break on retirement income, and the military benefits subtraction is the one built for veterans.1 Those two are what this guide covers. Whether any other Virginia subtraction applies to you turns on your own circumstances rather than your age, so check the Virginia Department of Taxation list of subtractions before assuming the Age Deduction is all you get. Local property taxes are a separate matter handled by your county or city, not the income tax covered here. A veteran with a VA disability rating can see what else the state ties to that rating in our guide to Virginia benefits for disabled veterans by VA rating.

Where Virginia Stands for Retirees

Virginia takes a middle path by design. It lifts Social Security off the return entirely, then taxes pensions, IRA withdrawals, and 401(k) distributions as ordinary income at 2 percent to 5.75 percent.1 There is no large flat retirement-income exclusion here: the Age Deduction, capped at $12,000 and phased out by income, is the only broad senior offset, alongside the separate $40,000 subtraction for eligible military benefits, which carries no age test.1

The Age Deduction is Virginia's signature move. At its full $12,000, it meaningfully lowers the tax on a modest retirement. But because it phases out, the benefit narrows for the retirees who have the most other income. A couple living mainly on Social Security and a small pension may pay little to no Virginia income tax. A couple with large IRA balances and steady six-figure withdrawals will feel the 5.75% top rate and watch the Age Deduction disappear.1

The takeaway: your Virginia tax picture depends far more on how much you draw from savings than on Social Security. The drawdown is the lever you control.

What This Means for Paying for Care

If you are pulling from retirement accounts to cover senior care, Virginia's rules shape your bill.

A large IRA or 401(k) withdrawal counts as Virginia income in the year you take it. That can push you into a higher bracket and shrink your Age Deduction at the same time, since the deduction phase-out is keyed to your income. Take a big distribution and you may lose part of the $12,000 you would have kept.1

Spreading withdrawals across more than one tax year often keeps more income in the lower brackets and protects more of the deduction. For the federal side of this same decision, see our guide to using retirement accounts for care.

Timing matters in another way too. If care costs are mounting, ask which withdrawals are truly needed this year versus next. A $60,000 care bill funded by one $60,000 IRA pull lands as a single income spike. Split into two $30,000 years, more of it stays in lower brackets and less of your Age Deduction phases out. Same care, smaller tax.1

Build this into a full plan rather than deciding withdrawal by withdrawal. Our guide to building a senior care funding plan walks through sequencing income sources so the tax bill stays predictable. If you are early in the process and weighing all your options, start with how to pay for senior care.

A tax professional can run your specific numbers before you move large sums. The cost of that advice is small next to a lost deduction or a bracket jump.

Learn More

Find personalized help planning how to pay for senior care at brevy.com.

The information on Brevy.com is for educational purposes only and is not a substitute for professional legal, financial, or medical advice. Rules vary by state and program and change frequently. Always verify with the relevant agency or a qualified professional. Brevy is not a law firm, financial advisor, or healthcare provider.