Military retirement pay in Virginia
Varies
Does Virginia Tax Military Retirement Pay?
Short answer: Partly. Virginia lets each recipient of any age subtract up to $40,000 of military benefits for 2025 and later; amounts above $40,000 are taxed. The subtraction phased in at $10,000 for 2022, $20,000 for 2023 and $30,000 for 2024. It covers military retirement pay and Survivor Benefit Plan payments to surviving spouses. Medal of Honor recipients exempt all military retirement pay. HB 137 (2026), which would have raised the cap and indexed it to inflation, died in committee, so the cap stays $40,000 for 2026. Other retirement income: Pensions and 401(k)/IRA withdrawals are taxable, but taxpayers 65+ may claim a $12,000 age deduction, reduced dollar-for-dollar when adjusted AGI exceeds $50,000 single / $75,000 married.
Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Records to keep: Keep your state return, W-2s and 1099s (1099-R, SSA-1099), and any state credit worksheets. Check your state revenue department's current-year instructions before you file.
Military retirement pay in Virginia
Varies
Individuals / Personal Taxes
Partly. Virginia lets each recipient of any age subtract up to $40,000 of military benefits for 2025 and later; amounts above $40,000 are taxed. The subtraction phased in at $10,000 for 2022, $20,000 for 2023 and $30,000 for 2024. It covers military retirement pay and Survivor Benefit Plan payments to surviving spouses. Medal of Honor recipients exempt all military retirement pay. HB 137 (2026), which would have raised the cap and indexed it to inflation, died in committee, so the cap stays $40,000 for 2026. Other retirement income: Pensions and 401(k)/IRA withdrawals are taxable, but taxpayers 65+ may claim a $12,000 age deduction, reduced dollar-for-dollar when adjusted AGI exceeds $50,000 single / $75,000 married.
Business justification
Partly. Virginia lets each recipient of any age subtract up to $40,000 of military benefits for 2025 and later; amounts above $40,000 are taxed. The subtraction phased in at $10,000 for 2022, $20,000 for 2023 and $30,000 for 2024. It covers military retirement pay and Survivor Benefit Plan payments to surviving spouses. Medal of Honor recipients exempt all military retirement pay. HB 137 (2026), which would have raised the cap and indexed it to inflation, died in committee, so the cap stays $40,000 for 2026. Other retirement income: Pensions and 401(k)/IRA withdrawals are taxable, but taxpayers 65+ may claim a $12,000 age deduction, reduced dollar-for-dollar when adjusted AGI exceeds $50,000 single / $75,000 married. Military retired pay is taxable federally; VA disability compensation isn't taxed federally or by any state.
Category
- Personal Tax Deductions