Partly taxed
How Virginia taxes retirement income
Virginia does not tax Social Security. Pensions, including VRS teacher and state pensions, and withdrawals from 401(k), 403(b), 457(b) and IRA accounts are taxed, but people 65 and older get an age deduction of up to $12,000 each.
For most retirees the deduction is income-tested. It falls dollar for dollar once adjusted federal AGI, which leaves out Social Security, passes $50,000 for single filers or $75,000 for married couples. A couple with $85,000 of pension and IRA income would see their combined $24,000 deduction cut by $10,000 to $14,000. People born on or before January 1, 1939 get the full $12,000 regardless of income.
Military retirees can subtract up to $40,000 of military retirement pay from 2025. Income above the deductions is taxed at rates up to 5.75%, which applies to most income above $17,000.
Virginia public pensions
For the formula, payment dates and raises in your plan, see Virginia VRS.
Questions
Does Virginia tax VRS pensions?
Yes, though retirees 65 and older can deduct up to $12,000 each, reduced at higher incomes.
Does Virginia tax Social Security?
No. Social Security is fully exempt.
How much military retirement is exempt?
Up to $40,000 a year from 2025.