Military Retirement Pay Income Tax Subtraction
Subtract up to $40,000 of military retirement income from Virginia taxable income.
At a glance
- Benefit type
- Tax Benefits — Virginia
- Who it's for
- Veterans
- VA rating needed
- No rating requirement
- Estimated value
- Up to $2,300/yr tax savings
- Where it applies
- Virginia
- Last verified
- May 12, 2026
What is Military Retirement Pay Income Tax Subtraction?
Military Retirement Pay Income Tax Subtraction is a Virginia tax benefits benefit for veterans. Subtract up to $40,000 of military retirement income from Virginia taxable income. The listed value is Up to $2,300/yr tax savings.
Who qualifies
- Available to any veteran
- Virginia residency
Who is eligible
Eligibility
Any military retiree receiving retirement income from the U.S. Armed Forces. No age requirement (as of tax year 2024). Virginia resident filing state taxes. TSP distributions do NOT qualify; only direct military retired pay.
What Military Retirement Pay Income Tax Subtraction covers
Covers
Subtract up to $40,000 for tax year 2025 and later. At Virginia's top marginal rate of 5.75%, this is worth up to $2,300 in annual tax savings.
How to apply for Military Retirement Pay Income Tax Subtraction
How to apply
Claimed on Virginia state income tax return.
Verified information & sources
Last verified: May 12, 2026
Official source: tax.virginia.gov
Compiled and fact-checked against the official source linked above. Benefit rules and dollar amounts change over time — always confirm current details at the official source before applying. A county Veterans Service Officer (VSO) is a free, accredited advocate who can review your eligibility and help you file at no cost.
Frequently asked questions about Military Retirement Pay Income Tax Subtraction
Who qualifies for Military Retirement Pay Income Tax Subtraction?▾
How much is Military Retirement Pay Income Tax Subtraction worth?▾
How do I apply for Military Retirement Pay Income Tax Subtraction?▾
Where can I verify Military Retirement Pay Income Tax Subtraction?▾
Other Virginia Tax Benefits
Survivor Benefit Plan (SBP) Income Tax Subtraction
Subtract up to $40,000 of SBP annuity income from Virginia taxable income.
Up to $2,300/yr tax savings
Medal of Honor Recipient Full Income Tax Exemption
Complete exemption of all military retirement income from Virginia state income tax for Medal of Honor recipients.
Full exemption of military retirement income
VA Disability Compensation State Tax Exemption
VA disability payments, pension payments, and survivors benefits are fully excluded from Virginia taxable income.
Varies (full federal/state exclusion of VA comp/pension/DIC)
Surviving Spouse Property Tax Exemption (Died in Line of Duty)
Full real property tax exemption for unremarried surviving spouses of service members who died in the line of duty.
$1,000-$10,000+/yr depending on locality
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