Virginia State Tax: Brackets, Form 760, and What You Actually Owe

Virginia state tax uses a graduated income tax with four brackets, set in Va. Code Section 58.1-320. The rates are 2% on Virginia taxable income up to $3,000, 3% on income from $3,000 to $5,000, 5% on income from $5,000 to $17,000, and 5.75% on every dollar above $17,000. That structure has been in place since 1990, which is unusual. While most states adjust brackets for inflation, Virginia has left these thresholds frozen for over three decades, so the bite of the Virginia state tax has quietly grown as wages rose against fixed brackets.

The practical effect of frozen brackets is that the 5.75% top rate now functions almost like a flat tax for anyone with a normal income. Think about it: a full-time worker earning $40,000 clears the $17,000 threshold and pays 5.75% on the top $23,000 of their taxable income. A surgeon earning $400,000 pays the exact same 5.75% on income above $17,000. The lower brackets only shelter the first chunk, and that chunk is tiny relative to a typical salary. So when people ask what the Virginia state tax rate is, the honest answer for most of them is 5.75% at the margin. The 2% and 3% brackets are almost a rounding error on a real paycheck.

Here is how the tax on the first $17,000 builds up, which you need for the formula. The first $3,000 at 2% is $60. The next $2,000 (from $3,000 to $5,000) at 3% is another $60. The next $12,000 (from $5,000 to $17,000) at 5% is $600. Add those together and you get $720. So for anyone with Virginia taxable income above $17,000, the total Virginia income tax is $720 plus 5.75% of the amount over $17,000. That single formula covers the vast majority of Virginia filers and is worth memorizing if you want to estimate your own Virginia state tax quickly without pulling up software.

Worked example: a single filer with $60,000 of Virginia taxable income. Tax on the first $17,000 is $720. The amount over $17,000 is $43,000. At 5.75%, that is $2,472.50. Total Virginia income tax is $3,192.50, or about 5.3% of the $60,000. Notice the effective rate (5.3%) is lower than the marginal rate (5.75%) because the first $17,000 was taxed at lower rates. That gap between effective and marginal is small in Virginia precisely because the brackets are so compressed. In a state with brackets that ran into six figures, the gap would be much wider; in Virginia it is almost negligible once you earn a real salary.

Try a second example to see the pattern hold. A married couple filing jointly with $150,000 of Virginia taxable income still applies the same brackets, because Virginia does not widen the brackets for joint filers the way the federal system does. Tax on the first $17,000 is $720, and the $133,000 above $17,000 at 5.75% is $7,647.50, for a total of $8,367.50. That is an effective rate of about 5.58% on their taxable income, creeping closer to the 5.75% marginal rate as income climbs. The lesson is that the more you earn in Virginia, the closer your effective rate hugs 5.75%, which is the opposite of how people expect a graduated system to feel.

One important distinction: Virginia taxable income is not your gross salary and not your federal taxable income. You start from federal adjusted gross income, add Virginia additions, subtract Virginia subtractions, then subtract the Virginia standard or itemized deduction and your personal exemptions of $930 each. Only after all that do you apply the brackets. A common mistake is plugging gross wages straight into the brackets and panicking at the number. Subtract the deduction and exemptions first, then apply the formula. The state income tax calculator on tax.virginia.gov runs the full sequence for you, and the federal starting figure comes off the IRS Form 1040. If you run the brackets on gross wages, you will overstate your Virginia state tax by hundreds of dollars and may overpay your estimates.

It also helps to understand what these brackets do not do. They do not phase in slowly like a long federal schedule, and they do not give high earners any meaningful break through graduated tiers. Because the top bracket starts so low, the Virginia state tax is closer to proportional than progressive once you pass a modest income. Two households earning $80,000 and $250,000 face the identical 5.75% marginal rate, and the only difference in their effective rates comes from the small cushion of the lower brackets and from deductions, exemptions, and subtractions. That is why planning in Virginia focuses far more on subtractions and credits than on bracket management, which is the opposite of how high-bracket states work.

Virginia has floated rate changes and bracket updates in various budget cycles, but as of now the four-bracket structure with the 5.75% top rate at $17,000 still stands. Because the legislature revisits the budget every session, it is worth confirming the current figures on tax.virginia.gov before you file rather than assuming they carried over from a prior year. If your income crosses state lines or you moved during the year, the bracket math is the easy part. The hard part is figuring out which income Virginia gets to tax in the first place, and that is where our individual tax return service earns its keep. Looking ahead, keep an eye on each year’s budget bill, since Virginia’s frozen brackets are a perennial target for reform discussions and any change to that $17,000 threshold would move the needle for nearly every filer in the state.

If you are estimating quarterly payments, the formula does the heavy lifting. Take your projected Virginia taxable income, subtract $17,000, multiply the remainder by 5.75%, then add $720. That gives you the annual Virginia state tax, which you divide by four for your quarterly vouchers. Self-employed Virginians who skip this step and rely on a flat percentage of gross income almost always miss, because gross income and Virginia taxable income are far apart once the standard deduction, exemptions, and subtractions come off. The brackets reward careful arithmetic on the right base, not guesswork on a bigger number. When in doubt, run the official calculator with a realistic income figure and use its output as your quarterly target rather than a rule of thumb you half-remember from a coworker.

Virginia individual income tax returns are due May 1, per the Virginia Department of Taxation. This is the single fact that trips up more new Virginia residents than any other. The federal deadline is April 15, so people file their 1040, breathe a sigh of relief, and assume they are done. They are not. Virginia gives you sixteen extra days, and missing that May 1 date because you forgot the state return exists is a needless way to draw a penalty on your Virginia state tax.

The main form is Form 760, the Virginia resident income tax return. Full-year residents file 760. If you moved into or out of Virginia during the tax year, you file Form 760PY, the part-year resident return, where you report only the income earned while a Virginia resident and prorate your standard deduction to your months of residency. Nonresidents who earned Virginia-source income, such as wages from a Virginia employer or rental income from Virginia property, file Form 763. Picking the wrong form is a common error for people in their first or last year in the state, and it usually means redoing the return after the department flags the mismatch.

Virginia grants an automatic six-month extension to file, with no application required. For calendar-year filers, that pushes the filing deadline to November 1. Here is the catch that costs people money: the extension is to file, not to pay. Any Virginia state tax you owe is still due May 1. If you file in October but owed $3,000 in May, you accrue penalties and interest on that $3,000 from May 1 forward. The extension only protects you from the late-filing penalty, not the late-payment penalty. If you expect to owe, make an extension payment by May 1 through the individual payment options on the state site. Treat the extension as breathing room for paperwork, never as a pass on the money.

Form 760 starts from your federal adjusted gross income, then runs through Virginia additions and subtractions on Schedule ADJ, applies your deduction and exemptions, and arrives at Virginia taxable income. From there you apply the brackets to get your tax, then subtract withholding, estimated payments, and any credits to land on your refund or balance due. Most filers attach at least Schedule ADJ. If you itemize, you also complete the Virginia Schedule A, and remember that Virginia ties your itemize-versus-standard choice to whatever you did on the federal return. The Virginia state tax return is short relative to the federal 1040, but the additions and subtractions schedule is where accuracy matters most.

Worked example of the deadline math: say you owe $2,000 of Virginia state tax and you file on October 15 without making any payment. The extension covers the late filing, but the late-payment penalty and interest run on that $2,000 from May 1. Virginia’s late-payment penalty and the interest (the federal underpayment rate plus 2%) add up over five-plus months. Had you simply sent $2,000 with an extension voucher by May 1, you would owe nothing extra at filing. The lesson is blunt: pay by May 1 even if you file later, and if you cannot pin down the exact number, overpay slightly and collect the difference as a refund.

Estimated payments are the other deadline that catches people, especially the self-employed and anyone with significant income outside of wage withholding. Virginia generally requires estimated tax payments if you expect to owe more than $150 after withholding, and the quarterly due dates fall on May 1, June 15, September 15, and January 15 for calendar-year filers. Miss them and you can owe an addition to tax for underpayment even if you square up everything by the May 1 filing date. Freelancers, landlords, and people with large capital gains are the ones who most often get surprised by this, because their income does not have Virginia tax withheld at the source the way a paycheck does.

Special deadlines exist for service members and people living abroad. If you are stationed outside the US or traveling outside the country on May 1, you generally have until July 1 to file, and combat-zone service gets the same extensions the IRS allows plus additional time. These rules are spelled out on the state’s When to File page, and you typically write a short notation like “Overseas Rule” on the top of the return to claim them. Military families move and deploy on schedules that rarely line up with a May 1 deadline, so these provisions exist for a reason and are worth claiming when they apply.

There is also a residency question buried inside the form choice. Virginia treats you as a resident if Virginia is your domicile or if you maintained a place of abode here for more than 183 days during the year. That dual test catches people who think of themselves as residents of another state but spent most of the year physically in Virginia. Getting residency wrong does not just change the form; it changes how much of your income Virginia can tax. People with homes in two states, remote workers, and recent movers are the ones who most often get this wrong, and the fix after the fact involves amended returns in two jurisdictions.

For anyone with a straightforward situation, the takeaway is simple: mark May 1, not April 15, and pay what you owe by that date. Our tax preparation team files the federal and Virginia returns together so the state deadline never slips through the cracks, and we sort out the resident-versus-part-year-versus-nonresident question before the return goes out. Going forward, if your life involves moves, deployments, or out-of-state work, build the May 1 date and the part-year form question into your annual checklist so the Virginia state tax return never becomes an afterthought.

One more practical tip on the Virginia state tax deadline: do not wait on a missing federal form to file the state return, but do not file Virginia before the federal 1040 is final either. Because Form 760 pulls its starting AGI straight from the federal return, an amended federal return forces an amended Virginia return. If you expect a late corrected 1099 or K-1, it is usually cleaner to make the May 1 payment, ride the automatic extension to November 1, and file both returns once the federal numbers stop moving. Filing twice because a document arrived in June is avoidable friction. Pay on time, file once the picture is stable, and keep the federal and Virginia returns in sync so the AGI on each one matches to the dollar.

The Virginia standard deduction is $8,750 for single filers and $17,500 for married couples filing jointly, according to the Virginia Department of Taxation. Married taxpayers filing separately each claim $8,750. These figures climbed substantially in recent years as part of legislative changes, and the increase reshaped the itemize-versus-standard decision for a lot of Virginia households filing their Virginia state tax return.

The rule that governs everything here: your Virginia deduction method must match your federal method. If you claimed the standard deduction on your federal return, you are required to claim the Virginia standard deduction. If you itemized federally, you itemize in Virginia. You do not get to mix and match, picking standard on one and itemized on the other to grab the bigger number on each. This linkage is why the federal standard deduction increase under the Tax Cuts and Jobs Act, and the figures in effect now ($16,100 single and $32,200 joint for 2026 per the IRS), pushed millions of taxpayers to the standard deduction on both returns.

So how do you decide? Run the comparison federally first, because that choice cascades down to your Virginia state tax. Total your itemizable deductions: state and local taxes (capped at $40,400 federally for 2026, phasing down toward $10,000 once modified AGI passes $505,000), mortgage interest, charitable contributions, and large medical expenses above the threshold. If that total beats your federal standard deduction, you itemize on both returns. If it does not, you take the standard deduction on both. The wrinkle is that Virginia’s standard deduction is much smaller than the federal one, so there are situations where itemizing would actually help your Virginia return even though it did not help federally. But the matching rule blocks you from doing that. You are stuck with whatever the federal math dictated, and there is no override.

Worked example: a married couple filing jointly in Virginia with $22,000 of itemizable deductions (think $10,000 of state and local taxes, which now sits well under the $40,400 SALT cap, plus $9,000 of mortgage interest and $3,000 of charity). Federally, $22,000 is below the $32,200 standard deduction for a married couple in 2026, so they take the federal standard deduction. That locks them into the Virginia standard deduction of $17,500 too, even though their $22,000 of itemized deductions exceeds the $17,500 Virginia standard. They lose $4,500 of deductions on the Virginia side purely because of the federal matching rule. At the 5.75% rate, that $4,500 of lost deduction costs them roughly $259 in extra Virginia state tax. It is a real cost of the post-TCJA world that many Virginia filers never notice because nobody points it out.

A frequent mistake we see: taxpayers who assume they can itemize in Virginia to capture that gap. You cannot, not without itemizing federally. The only way to claim that $22,000 in the example above is to itemize federally, which means giving up the larger $32,200 federal standard deduction. That trade rarely makes sense, because the federal benefit of the larger standard deduction almost always outweighs the smaller Virginia advantage of itemizing. So most couples in this spot correctly take both standard deductions and simply accept the smaller Virginia number. Understanding why prevents a misfiled return and a correction notice, and it stops people from chasing a Virginia benefit that the federal rules make unreachable.

There is one planning move that does work around the matching rule: bunching. If your itemizable deductions hover just under the federal standard deduction year after year, you can concentrate two years of charitable gifts, or time elective medical procedures, into a single year. In the bunching year, your itemized total may leap past the federal standard deduction, letting you itemize on both the federal and Virginia returns and capture the full deduction. In the off years, you take the standard deduction. Over a two-year cycle, bunching can beat taking the standard deduction every year, and because Virginia follows the federal choice, the bunching year helps your Virginia state tax automatically.

Married couples have one more wrinkle to think through: filing status. Virginia lets married couples file jointly, or use a combined separate computation on the same Form 760 (filing status 4) that splits income between the two spouses. That combined separate method can actually lower the total Virginia state tax in some two-earner households, because it lets each spouse use the lower brackets on the first $17,000 of their own income rather than stacking everything together. The federal return is almost always filed jointly, but Virginia gives you this extra in-state option. Running the return both ways is the only reliable way to know which is cheaper, and software handles the comparison if you ask it to.

Beyond the standard deduction, Virginia offers a list of separate deductions and subtractions that do not depend on itemizing, including the age deduction, the Virginia529 contribution subtraction of up to $4,000 per account, child and dependent care expenses, and long-term care insurance premiums. These come off your income regardless of whether you took the standard deduction, so do not overlook them just because you are not itemizing. Many filers leave the 529 subtraction unclaimed simply because they did not know it existed, and that is free money walking out the door every April. For a full read on how state deductions interact with your federal return, see our guide on how Form 1040 works. Planning ahead, if you are near the itemize threshold, deciding when to bunch and which Virginia subtractions to stack is exactly the kind of thing worth modeling before December 31 rather than discovering at filing time.

Keep good records either way you go. If you take the standard deduction this year but expect to itemize next year through bunching, the receipts, mortgage interest statements, and charitable acknowledgment letters still need to be organized and saved. Virginia can ask you to substantiate itemized deductions on Schedule A just as the IRS can, and the matching rule means a federal audit adjustment to your itemized deductions flows straight through to your Virginia return. A clean folder of supporting documents turns a stressful notice into a five-minute response. The taxpayers who get hurt are the ones who claimed deductions they cannot prove, then cannot reconstruct the paper trail two years later when the letter arrives. Document as you go, not at filing time.

The base Virginia sales and use tax rate is 5.3%, but the rate you pay at the register depends on where the sale happens, because several regions tack on their own increments. The 5.3% statewide rate breaks down into a 4.3% state portion and a 1% local portion, per the Virginia Department of Taxation. That 5.3% is the floor. Many of the state’s most populated areas charge more, so the Virginia sales tax you actually pay is rarely the headline number.

Here is the full regional breakdown. The base 5.3% applies everywhere not specifically listed. The rate rises to 6.0% in three major regions: Central Virginia (including Richmond City, Henrico, Chesterfield, and surrounding counties), Hampton Roads (including Virginia Beach, Norfolk, Chesapeake, Newport News, and the rest of the area), and Northern Virginia (including Fairfax, Arlington, Alexandria, Loudoun, and Prince William). A 6.3% rate applies in a cluster of southern and Eastern Shore localities: Charlotte, Danville, Gloucester, Halifax, Henry, Northampton, Patrick, and Pittsylvania. The highest rate, 7.0%, applies in the Historic Triangle area of James City County, Williamsburg, and York County, which carries an extra regional tax tied to tourism. So the spread between the cheapest and most expensive places to buy in Virginia is a full 1.7 percentage points.

Groceries get special treatment. Food for home consumption and certain basic personal hygiene products are taxed at just 1% statewide. This reduced grocery rate replaced a higher combined grocery tax in recent years, a change that put real money back in household budgets, especially for larger families who spend heavily on food. So your weekly grocery bill carries far less sales tax than a comparable purchase of, say, electronics or clothing. The 1% grocery rate is uniform across the state, with no regional add-on, which is a deliberate exception to the otherwise patchwork map. The line between a 1% grocery item and a fully taxed item is not always obvious, though: prepared foods and certain ready-to-eat items can fall outside the reduced rate.

Worked example of how region drives the bill: buy a $1,000 laptop in Roanoke, which sits at the 5.3% base rate, and you pay $53 in sales tax. Buy the same $1,000 laptop in Fairfax County in Northern Virginia at 6.0%, and you pay $60. Buy it in Williamsburg at 7.0%, and you pay $70. Same laptop, a $17 difference in tax depending purely on the county line you happened to be standing in. For big-ticket purchases, that regional spread is worth knowing, though for most people the convenience of buying locally outweighs the few dollars saved by crossing a county line. Where it does matter is for businesses making large equipment purchases, where the rate difference on a six-figure order is real.

The Virginia use tax is the often-forgotten companion to the sales tax. If you buy something from an out-of-state seller who does not collect Virginia sales tax (rarer now that economic nexus rules force most large remote sellers to collect), you technically owe consumer’s use tax at the same rate to Virginia directly. Individuals report it on their income tax return. Few people do, and enforcement against individuals is light, but the obligation exists on paper. Businesses face much tighter scrutiny on use tax, especially on equipment and supplies bought from out-of-state vendors who did not charge Virginia tax. An auditor reviewing a company’s purchase records will look for exactly this gap, so businesses cannot afford to ignore it the way individuals often do.

It helps to understand who actually remits the Virginia sales tax. The seller, called a dealer under state law, collects the tax from the customer at the point of sale and then sends it to Virginia Tax when filing the sales tax return. Starting with the April 2025 filing period, all sales tax filers use Form ST-1, which replaced the older ST-9 and related forms. Returns are due on the 20th of the month following the filing period, and you have to file even in a month with zero sales. Filing frequency, monthly or quarterly, is assigned based on your tax liability. Online sellers crossing $100,000 in annual Virginia sales or 200 transactions hit economic nexus and must register and collect, even with no physical presence in the state.

There is also a sales tax holiday worth marking on the calendar. Each year, typically in early August, Virginia runs a three-day holiday where qualifying school supplies, clothing, certain emergency-preparedness items, and Energy Star products are exempt from the sales tax up to set price caps. For a family stocking up on back-to-school clothes and supplies, the holiday can shave real money off a large cart. The catch is the price caps and the narrow list of qualifying items, so a $200 jacket will not qualify even though a $90 one might. Retailers handle the exemption at the register automatically during the holiday window, so you do not file anything to claim it.

A common mistake among new business owners is treating sales tax as their money. It is not. You collect it from your customers as a pass-through and remit it to the state, and spending that collected tax on operating expenses and coming up short at remittance time is a classic way to land in trouble with the department. Penalties for late sales tax filing run 6% per month up to a 30% maximum, with a $10 minimum even on a zero return. If you run a business that collects Virginia sales tax, our bookkeeping service keeps the collected tax segregated and the filings on schedule so the money is there when ST-1 is due. Looking forward, expect remote-seller and marketplace-facilitator rules to keep tightening, so the old habit of buying online to dodge Virginia sales tax is largely a thing of the past.

For business owners, the most useful habit is to reconcile collected sales tax to your point-of-sale system every month, not just at filing. If your register is set to the wrong locality rate, you either undercollect and eat the difference at remittance, or overcollect and create a refund headache for customers. Northern Virginia and Hampton Roads businesses are especially exposed because a sale that crosses into a neighboring locality can carry a different rate. Build the correct regional rate into your software once, verify it against the official rate schedule, and recheck it whenever the state updates rates. A few minutes of setup prevents the slow leak of misapplied Virginia sales tax that an audit will eventually surface, with penalties attached to whatever you got wrong.

Virginia layers several state-specific subtractions on top of your federal adjusted gross income, and three of the most valuable involve age, military service, and retirement. Because Virginia starts from federal AGI, these subtractions are how you carve out income the state chooses not to tax. Miss them and you overpay your Virginia state tax, sometimes by hundreds or thousands of dollars a year. The full list lives on the Virginia subtractions page, and most of them are claimed on Schedule ADJ.

The age deduction is the big one for older taxpayers. Virginia residents who are 65 or older can subtract up to $12,000 of income, and those born on or before a certain date get the full amount regardless of income, while younger seniors face an income-based phaseout. The phaseout reduces the deduction as your adjusted federal AGI rises above a threshold, so higher-income retirees get less or none of it. The state provides an age deduction calculator to run the phaseout for your specific numbers, which matters because the interaction with Social Security and pension income gets complicated quickly and a hand estimate is easy to botch.

For military pay, Virginia gives active-duty service members a subtraction for a portion of their basic military pay, subject to income limits. Separately, and this is the change that has gotten a lot of attention, Virginia has expanded its subtraction for military retirement income. The state has been phasing in a larger exclusion for military retirement pay received by veterans, with the deductible amount increasing over recent tax years. The specifics, including the cap and any age requirements, have been moving targets as the legislature ratchets the benefit up, so confirm the current-year figure on tax.virginia.gov before relying on a number you remember from a prior return. For a state with so many service members and veterans, this subtraction has become one of the more meaningful pieces of the Virginia state tax picture for military households.

Worked example: a 67-year-old single Virginia retiree with $50,000 of income, qualifying for a $12,000 age deduction (assume they are below the phaseout threshold). Start with $50,000 of income. Subtract the $12,000 age deduction, the $8,750 standard deduction, the $930 personal exemption, and an additional $800 age-65 exemption. That leaves Virginia taxable income of about $27,520. Tax on the first $17,000 is $720, plus 5.75% of the $10,520 over $17,000, which is about $605. Total Virginia state tax is roughly $1,325. Without the $12,000 age deduction, taxable income would be $39,520, and the tax would be about $2,015. The age deduction saved this retiree about $690 in a single year, which repeats annually.

Social Security is fully exempt from Virginia income tax, which is worth stating plainly because it surprises some new retirees who assumed Virginia would tax it the way it taxes wages. To the extent your Social Security benefits are taxed federally and included in your federal AGI, Virginia lets you subtract that taxable portion back out. So benefits that the IRS taxed do not get taxed again by Virginia. This makes Virginia somewhat friendlier to retirees than its 5.75% headline rate suggests, especially when you stack the Social Security exemption, the age deduction, and the growing military retirement exclusion. A retiree with Social Security, a modest pension, and qualifying military retirement pay can shelter a surprising share of income from the Virginia state tax.

The age-deduction phaseout deserves a closer look because it is where most errors happen. For taxpayers born after a cutoff date, Virginia reduces the $12,000 deduction by $1 for every $1 that adjusted federal AGI exceeds an income threshold (the threshold is higher for joint filers than for singles). So a single retiree whose adjusted AGI runs well above the threshold can see the deduction shrink to zero, while one just over the line keeps most of it. The calculation also folds in any Social Security and Tier 1 Railroad Retirement benefits when figuring the adjusted AGI used for the phaseout, which is exactly the kind of detail that hand calculations miss. Run the state’s calculator with your real numbers rather than assuming you either get the full $12,000 or nothing.

There are other subtractions worth knowing in this category. Virginia allows a subtraction for certain retirement income for some taxpayers, a subtraction tied to first-time homebuyer savings accounts, and the Virginia529 education savings subtraction of up to $4,000 per account per year for younger account owners (uncapped at age 70 and older). Disability income and certain federal and state pension amounts can also qualify in specific situations. None of these happen automatically. Each one has to be entered on the right line of Schedule ADJ, with the right code, or the software will not apply it. Tax preparation software will prompt for many of them, but only if you answer the interview questions accurately, and rushed filers routinely skip the screens that unlock these subtractions.

The most common mistake here is leaving the age deduction or the military subtractions unclaimed because the taxpayer, or a rushed software entry, skipped Schedule ADJ entirely. These subtractions do not happen just because you are old enough or served in the military; you have to claim them. We also see people misapply the phaseout, either taking the full $12,000 when their income disqualifies part of it, or taking nothing when they actually qualified for a partial amount. Both errors draw notices and, in the overclaim case, a bill for the difference plus interest. For coordinated planning across your federal and state returns, our tax strategy service maps out which subtractions you qualify for before you file rather than after. Going forward, retirees and veterans should re-check the military retirement and age-deduction figures each year, since Virginia keeps adjusting them and last year’s number may understate what you can claim this year.

Timing matters with these retirement subtractions. The year you turn 65, you become eligible for both the additional $800 exemption and the age deduction, so a retiree who turns 65 mid-year should make sure the return reflects the new status rather than carrying forward last year’s entries. Likewise, a service member transitioning to veteran status, or a veteran whose military retirement exclusion increases under the phase-in schedule, should revisit the subtraction amount each filing season rather than copying the prior return. Virginia keeps adjusting these benefits upward, and software defaults sometimes lag a year behind the current statute. Pulling the current figures off tax.virginia.gov before you file is the difference between claiming the full Virginia state tax benefit you earned and quietly leaving part of it unclaimed.