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, and how the Age Deduction shrinks as income climbs.

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.

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 built for veterans. If you are 55 or older and receive military retirement pay, you can subtract up to $40,000 of that income for tax year 2025 and later, up from $30,000 in 2024.1 The military retirement subtraction is separate from the Age Deduction, so an eligible veteran can claim both in the same year. With Virginia home to one of the largest veteran populations in the country, this break reshapes the tax math for a lot of retired service members.

There is no separate senior tax credit stacked on top in Virginia. The Age Deduction is the main age-based break. There is no extra carve-out for IRA money, no special pension exclusion, and no county-level senior income tax break. Virginia does not levy a local income tax, so the rate you see is the rate you pay statewide. Local property taxes are a separate matter handled by your county or city, not the income tax covered here.

Where Virginia Stands for Retirees

Virginia sits in the middle of the pack for taxing retirees. It earns points for fully exempting Social Security, which not every state does. It loses some ground because, unlike a handful of states, it taxes pension and retirement-account income rather than carving out a large flat exclusion.

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.