Is Military Retirement Taxable in Virginia?
For veterans and military personnel retiring in Virginia, understanding the tax implications of their retirement pay is crucial. While the federal government offers some tax benefits, state taxes can still apply. In this article, we’ll dive into the taxability of military retirement in Virginia, exploring the complexities and exemptions.
Direct Answer:
Military retirement is partially taxable in Virginia. The Commonwealth of Virginia taxes a portion of military retirement pay, but exempts a significant portion of it. Let’s break down the specifics:
- Exempt amount: Virginia exempts the first $20,000 of military retirement pay from state income tax. This amount is adjusted annually for inflation.
- Taxable amount: The remaining military retirement pay, above the exempt amount, is subject to Virginia state income tax.
- Federal tax benefits: Military retirement pay is generally tax-free at the federal level, except for any interest earned on the payments.
Tax Implications:
Virginia state tax laws apply to military retirement pay, and it’s essential to understand the implications:
- State tax rate: Virginia has a state income tax rate of 2% to 5.75%. The exact rate depends on your filing status and income level.
- Taxable income: When calculating your state taxable income, you’ll include the taxable portion of your military retirement pay.
- Other income: You may also need to report other sources of income, such as Social Security benefits, pensions, or self-employment income.
Virginia Tax Exemptions:
While Virginia taxes a portion of military retirement pay, there are some exemptions and deductions you should know about:
- Senior Citizen Exemption: Eligible seniors (65 and older) can claim an exemption of up to $12,000 of income from state tax.
- Veterans’ Exemption: Eligible veterans can claim an exemption of up to $10,000 of income from state tax.
- Homeowner Exemption: If you’re a homeowner, you may be eligible for a $1,000 exemption.
Filing Requirements:
As a Virginia resident receiving military retirement pay, you’ll need to file a state tax return if your taxable income exceeds $12,000 (single) or $24,000 (joint). You can file online or by mail using the Virginia Individual Income Tax Return (Form VA-5).
Important Dates:
Don’t miss these key dates when filing your Virginia state tax return:
- Deadline: April 15th (or June 15th if you’re unable to file by the April deadline)
- Extensions: You can file for a six-month extension using Form VA-761
- Amendments: You can file an amended return (Form VA-5A) within three years of the original filing deadline
Conclusion:
In summary, military retirement pay in Virginia is partially taxable. The first $20,000 is exempt from state income tax, while the remaining amount is subject to a state tax rate of 2% to 5.75%. Understanding the tax implications, exemptions, and filing requirements will help you navigate the complexities and ensure you’re in compliance with Virginia state tax laws.
Table: Military Retirement Tax in Virginia
| Type of Income | Exempt Amount | Tax Rate | Taxable Income |
|---|---|---|---|
| Military Retirement Pay | First $20,000 | 2% to 5.75% | Above exempt amount |
| Senior Citizen Exemption | Up to $12,000 | N/A | N/A |
| Veterans’ Exemption | Up to $10,000 | N/A | N/A |
| Homeowner Exemption | $1,000 | N/A | N/A |
Bullets List:
- File a Virginia state tax return if your taxable income exceeds $12,000 (single) or $24,000 (joint)
- Claim exemptions and deductions as applicable (e.g., Senior Citizen Exemption, Veterans’ Exemption, Homeowner Exemption)
- Consult with a tax professional or the Virginia Department of Taxation if you have questions or concerns about your specific situation
- File by the deadline (April 15th) or request an extension (Form VA-761)
- Review and amend your return as necessary (Form VA-5A)
