Military pay and Virginia state tax

Does the state tax personal income?

Virginia imposes an individual income tax administered by the Virginia Department of Taxation, which publishes dedicated military guidance.

Active duty pay

Virginia Tax describes a subtraction from Virginia income for military basic pay for personnel on extended active duty for more than ninety days, and states that the maximum subtraction is reduced as basic pay rises above the subtraction ceiling until no subtraction remains.

Stationed outside the state

Virginia Tax states that military personnel stationed inside or outside Virginia may be eligible for the basic pay subtraction, and that a service member who claims a state other than Virginia under the Servicemembers Civil Relief Act is treated as a Virginia nonresident whose active duty pay is protected and exempt from Virginia individual income tax, while other Virginia income such as a part-time job, self-employment or rental income generally remains taxable.

Combat pay

Virginia Tax states that combat pay excluded from federal adjusted gross income may not be subtracted again on the Virginia return, and refers to its tax bulletin on combat zone extensions and benefits.

Military retirement pay

Code of Virginia section 58.1-322.02, subdivision 18, allows a subtraction of up to $30,000 of military benefits for taxable years beginning on and after January 1, 2024 but before January 1, 2025, and up to $40,000 of military benefits for taxable years beginning on and after January 1, 2025. The statute defines military benefits to include military retirement income for service in the Armed Forces of the United States, qualified military benefits under Internal Revenue Code section 134, and benefits paid to the surviving spouse of a veteran. The subtraction at the $30,000 and $40,000 tiers is allowed for military benefits received by an individual of any age, and the age-55 condition applies only to the earlier $10,000 and $20,000 tiers for taxable years beginning before January 1, 2024. The statute also provides that no subtraction is allowed if a credit, exemption, subtraction or deduction is claimed for the same income under another provision of Virginia or federal law, and separately allows a subtraction for military retirement income of an individual awarded the Congressional Medal of Honor.

• For taxable years beginning on and after January 1, 2024 but before January 1, 2025, the statute allows a subtraction of up to $30,000 of military benefits, at any age.
• For taxable years beginning on and after January 1, 2025, the statute allows a subtraction of up to $40,000 of military benefits, at any age.

• The statute provides that no subtraction is allowed where a credit, exemption, subtraction or deduction is claimed for the same income under another provision of Virginia or federal law.

• Up to $30,000 of military benefits — tax year 2024
• Up to $40,000 of military benefits — tax year 2025

Survivor benefits

Code of Virginia section 58.1-322.02 includes within military benefits the benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States under the Survivor Benefit Plan program established by the U.S. Department of Defense, and separately allows a subtraction for the military death gratuity payment made after September 11, 2001 to the survivor of deceased military personnel killed in the line of duty under chapter 75 of title 10 of the United States Code, reduced dollar-for-dollar by the amount the survivor may exclude from federal gross income under Internal Revenue Code section 134.

Guard and Reserve

Virginia Tax describes an exemption for wages or salaries received for active and inactive service in the Virginia National Guard, limited by a stated number of service days or a stated ceiling, whichever is less, and available only to members in specified ranks, and explains how ninety consecutive days of active duty status interacts with the basic military pay subtraction.

Military spouses

Virginia Tax states that under the Servicemembers Civil Relief Act a service member and spouse may each use the residence or domicile of the service member, the residence or domicile of the spouse, or the service member's permanent duty station, that they are not required to choose the same residence, and that a nonresident spouse's Virginia income for services performed is protected and exempt.

Filing

Virginia Tax states that filing requirements for members of the Armed Forces are generally based on income and residency status, and that a nonresident with Virginia income that is not protected files the nonresident individual income tax return.

Withholding

Virginia Tax states that when a service member or spouse notifies an employer of personal exemptions on Form VA-4, income protected by the Servicemembers Civil Relief Act is indicated by checking the line for that Act, that a nonresident filer whose only Virginia income is protected is not required to file a Virginia return or pay Virginia individual income tax, and that a filer who had Virginia tax withheld may file Form 763-S to request a refund of the amount withheld.