Military Retirement Pay Income Tax Subtraction
Subtract up to $40,000 of military retirement income from Virginia taxable income.
Who qualifies
- Available to any veteran
- Virginia residency
Details
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.
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
Claimed on Virginia state income tax return.
Always confirm current rates and rules with the Virginia state agency before applying.
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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