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Virginia Income Tax: 5.75% Top Rate, Senior Deductions & Residency Audit

5.75% Top Rate on $17K+ • Age Deduction for 65+ • No Bonus Depreciation • Active Military Exempt • Residency Audit Risk
Va. Code §58.1-320Va. Code §58.1-322Va. Code §58.1-391
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Virginia imposes a graduated income tax with rates from 2% to 5.75%, but the top rate kicks in at just $17,000 of taxable income - meaning virtually all taxpayers pay the 5.75% rate on most of their income. Virginia offers an age deduction for residents 65 and older, does not tax active duty military pay, and provides a partial Social Security exemption for lower-income seniors. Virginia is notable for its aggressive residency enforcement: Washington DC-area residents who maintain Virginia ties while claiming DC or Maryland domicile face elevated audit risk, as Virginia actively pursues taxpayers who spend significant time in the state without filing Virginia returns.

Virginia 2026 Tax Rates

$0 - $3,000: 2%

$3,001 - $5,000: 3%

$5,001 - $17,000: 5%

Over $17,000: 5.75%

Standard deduction: $8,000 single, $16,000 MFJ (significantly lower than federal).

Personal exemption: $930 per person.

Age deduction for 65+: Up to $12,000 deduction for taxpayers 65 and older, phasing out with income.

No Conformity to Federal Bonus Depreciation

Virginia does not conform to the federal bonus depreciation deduction. Businesses that claim 100% bonus depreciation on federal returns must add back the excess depreciation on the Virginia return and can only deduct depreciation under the regular MACRS schedule. This means businesses in Virginia face a significant difference between federal and Virginia taxable income in years when large capital expenditures are made. The addback is recovered over the Virginia depreciation life of the asset, providing a deduction in future years, but creates a timing mismatch that increases Virginia income tax in acquisition years.

Virginia residency audit risk for DC-area commuters: Virginia aggressively audits taxpayers in the Washington DC metropolitan area who maintain homes or apartments in Virginia but claim domicile elsewhere. Virginia looks at: where the taxpayer spends the most time, where their family lives, where their vehicles are registered, where their professional licenses are held, and where their financial accounts are maintained. A person who lives in Virginia during the week and visits their nominal domicile on weekends faces Virginia residency assertion.

Military Pay Exemption

Active duty military pay received by Virginia residents is fully exempt from Virginia income tax. This exemption applies to all compensation for active duty military service regardless of where the service member is stationed. Military spouses may also be eligible for tax benefits under the Military Spouses Residency Relief Act (MSRRA), allowing them to claim the service member's state of domicile (which may not be Virginia) for income tax purposes.

Related Topics
State & Compliance HubAll state tax topics State Residency ChangeVirginia domicile change - documentation requirements Military TaxMSRRA spouse election - Virginia vs. service member domicile state Bonus DepreciationFederal 100% bonus vs. Virginia non-conformity addback OBBBA State ConformityVirginia conformity to federal OBBBA changes SALT PlanningVirginia PTET election for partnerships and S-corps
Authority: Va. Code §58.1-320 (Virginia income tax imposed on Virginia taxable income; graduated rates 2% to 5.75%; top rate applies above $17,000); Va. Code §58.1-322(C)(4) (age deduction - $12,000 deduction for taxpayers age 65 and older; phases out with income; reduces Virginia taxable income); Va. Code §58.1-322(A) (Virginia standard deduction - $8,000 single, $16,000 MFJ; lower than federal standard deduction; Virginia has its own deduction structure); Va. Code §58.1-322(B)(5) (active duty military pay exemption - compensation received for active duty military service fully exempt from Virginia income tax); Va. Code §58.1-340 (Virginia conformity to Internal Revenue Code - Virginia conforms to IRC with modifications; bonus depreciation addback required; 20% per year recovery over 5 years); Servicemembers Civil Relief Act and Military Spouses Residency Relief Act (MSRRA - military spouse may elect service member domicile state for income tax; annual election required; civilian wages in Virginia may be exempt if proper election made).