Tax Benefits for Active & Retired Military in Virginia
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Our military consists of brave men and women who serve our country, often in dangerous conditions. Virginia offers a variety of tax benefits for active military personnel and veterans to help ease their financial burden.
Virginia Military Tax Benefits for Active Military
Active military personnel are eligible for the following tax benefits in Virginia.
Virginia Income Tax Deduction for Military Pay
This deduction allows active military personnel to deduct their income from federal taxes on their Virginia state return. Those earning less than $30,000 from base pay can deduct up to $15,000. Maximum subtraction is reduced by $1 for every $1 of income over $15,000. Service members must have 90 days or more on active duty to qualify for this deduction.
Virginia Tax Exemption for National Guard Income
Service members with pay grades of O-3 and below can deduct the National Guard pay they received for the lesser or $3,000 or up to 39 calendar days of service.
Virginia Taxes on Combat and Hazardous Duty Pay
Virginia does not tax your combat pay or hazardous duty pay. Therefore, you do not have to include this income when calculating your Virginia state taxes.
Virginia Military Tax Benefits for Veterans
Virginia veteran tax benefits include the following.
Virginia Taxable Income Subtraction for Military Retired Pay
As a veteran over 55, you can deduct up to $40,000 of your retired military pay from Virginia taxable income. This Virginia veteran tax credit phases in over four years, starting at $10,000 for the 2022 tax year and increasing by $10,000 yearly until 2025.
Virginia Income Tax Subtraction for Military Retired Pay Received by Medal of Honor Recipients
Medal of Honor recipients can deduct up to 100% of their retired military pay from Virginia taxable income. Surviving spouses do not qualify for this deduction.
Virginia Taxes on Military Disability Retirement Pay
Military disability retirement from pensions, annuities, or similar allowances for injury or sickness due to active service in the U.S. Armed Forces is not included in taxable income.
Virginia Real Property Tax Exemption for 100% Disabled Veterans and Surviving Spouses
Retired military with 100% permanent and total disability rating or an individually unemployable rating from service are eligible for a real property tax exemption. In addition, un-remarried surviving spouses of eligible veterans and/or service members killed or wounded in action also qualify.
Virginia Sales and Use Tax Exemption for Disabled Veterans
Veterans who have been rated as having a 100% permanent and total disability by the VA are eligible for tax exemption on the purchase of a vehicle. Qualifying veterans must own, use, or maintain the vehicle. Additionally, a spouse's car can qualify if used primarily by or for the qualifying Veteran.
Questions
Have questions about how this might apply to your unique tax situation? Contact us to meet with one of our expert tax advisors.