You can owe Virginia state taxes if you live in another state, but only when you have income tied to Virginia — wages earned while physically working in the state, rent from Virginia property, profits from a Virginia business, or gains from selling Virginia real estate. Investment income and retirement distributions generally are not reachable. Virginia’s top individual rate is 5.75% on taxable income above $17,000, and nonresidents must file once Virginia-source income hits $11,950 for single filers or $23,900 for joint filers.
Two things complicate that clean answer: Virginia can pull you in as a full resident if you spend too much time there, and five neighboring jurisdictions have deals that let commuters skip the Virginia return entirely. Both are covered below.
When Virginia Treats You as a Resident Anyway
Virginia has two independent tests for full residency, and either one is enough to make your worldwide income taxable in Virginia.
The first is domicile. Your domicile is the place you consider your permanent home and intend to return to. Virginia looks at objective evidence rather than what you say: which state issued your driver’s license, where your car is registered, where you vote, where your family lives, the mailing address on your federal return, and where you bank. If those markers point to Virginia, you file as a resident on Form 760 no matter where you sleep most nights.
The second is the 183-day rule. If you keep a place to live in Virginia and are physically present in the state for more than 183 days during the tax year, you’re an “actual resident” and owe Virginia tax on all your income. The days do not need to be consecutive. Someone who keeps an apartment near a Virginia office and works there four days a week can cross the threshold without noticing.
If neither test applies, you’re a nonresident, and Virginia can tax only your Virginia-source income.
What Counts as Virginia Source Income
For a nonresident, everything depends on what makes income “Virginia source.” The rule follows the activity or the property, not the paycheck’s routing.
Income Virginia can tax:
- Wages and salaries for work you physically performed in Virginia, even if your employer sits in another state and pays you from an out-of-state account. A consultant who flies in for 40 days of client work owes Virginia tax on those 40 days of earnings.
- Net rental income from real estate located in Virginia.
- Capital gains from selling Virginia real property. Expect the settlement agent to withhold a portion of the proceeds at closing.
- Profits from a business operating in Virginia, including income passed through from a partnership, S corporation, or LLC doing business in the state.
Income Virginia generally cannot tax when you live elsewhere:
- Interest, dividends, and capital gains from stocks, bonds, and mutual funds, unless the investment is tied to a business you run in Virginia.
- Retirement income. Federal law bars states from taxing a nonresident’s pension, annuity, 401(k) distribution, or IRA withdrawal. Only your state of domicile can tax that.
Reciprocity Agreements for Nearby Commuters
Virginia has reciprocal agreements with the District of Columbia, Kentucky, Maryland, Pennsylvania, and West Virginia. If you qualify, you skip the Virginia nonresident return and report your wages only to your home state.
D.C. and Kentucky residents who commute daily to Virginia and earn only wage or salary income there are exempt from Virginia tax on those wages. Maryland, Pennsylvania, and West Virginia residents get the same treatment, with three added conditions: no more than 183 days of Virginia presence during the year, no home maintained in Virginia, and no Virginia income beyond wages or salary.
The agreement does not turn itself on. To stop Virginia withholding from your paychecks, file Form VA-4 with your Virginia employer and claim exemption on Line 3 based on your home state. The form has to be refiled each calendar year. If you skip it, your employer will withhold Virginia tax and you’ll need to file Form 763 to get it back.
Reciprocity covers only wages and salaries. A Maryland resident who owns a rental house in Norfolk or runs a business in Richmond still owes Virginia tax on that income and still files Form 763 for it.
Remote and Hybrid Work
Virginia uses a physical presence rule, not a “convenience of the employer” test. If you live in another state and work remotely for a Virginia-based employer, Virginia generally cannot tax the wages you earn while sitting at your out-of-state desk. Income is sourced where you are when you do the work.
Hybrid schedules are where this gets messy. If you live in North Carolina and drive to your Virginia office two days a week, the wages attributable to those Virginia workdays are Virginia source income and belong on Form 763. You apportion between the two states based on days worked in each location.
Keep a contemporaneous log of where you worked each day. If Virginia questions the return, a day-by-day record is the strongest evidence you have.
Military Members and Spouses
Under the Servicemembers Civil Relief Act, active-duty military members do not change domicile just because orders send them to a new duty station. A soldier domiciled in Texas who is stationed at Fort Belvoir remains a Texas resident, and Virginia cannot tax that servicemember’s military pay.
The Military Spouses Residency Relief Act extends similar protection to spouses. A spouse living in Virginia solely to be with a servicemember can elect to use the servicemember’s state of domicile, their own state of domicile, or the state of the servicemember’s permanent duty station for income tax purposes. The election can cover a civilian job the spouse works in Virginia, potentially wiping out Virginia tax on those wages.
There are limits. Investment income is not covered. Self-employment income qualifies only when the business income comes predominantly from personal services rather than capital or property. Anything falling outside the election still goes on Form 763. To stop withholding on exempt wages, the spouse should file a revised Form VA-4 with the employer.
Filing the Nonresident Return
You must file Form 763 if your Virginia adjusted gross income reaches $11,950 (single or married filing separately) or $23,900 (married filing jointly). File anyway, even below those thresholds, if Virginia tax was withheld from your pay or you made estimated payments — that’s the only route to a refund.
Form 763 starts from your total federal adjusted gross income, then subtracts everything that isn’t sourced to Virginia. What’s left is your Virginia adjusted gross income, and that’s the figure Virginia taxes.
Two dates matter. Virginia’s filing deadline is May 1, not April 15. Virginia also grants every taxpayer an automatic six-month filing extension to November 1, with no form required. The extension covers filing only. Any tax owed is still due May 1, and interest runs from that date on unpaid balances. If your expected Virginia liability after withholding and credits will exceed $150, you’re required to make quarterly estimated payments.
Avoiding Double Tax on the Same Income
When both Virginia and your home state have a claim on the same income, the credit system is what keeps you from paying twice. As a nonresident, you pay Virginia first on the Virginia-source income, then claim a credit on your home state’s return for the Virginia tax you paid. Your home state generally allows that credit up to the amount of home-state tax on the same income; if Virginia’s rate is higher, your home state won’t refund the difference.
Virginia itself allows a nonresident to claim a credit on Virginia Schedule OSC only in a narrow set of cases: residents of Arizona, California, the District of Columbia, or Oregon. Everyone else claims the credit at home.
Where reciprocity is available, it’s the cleaner tool. It stops the double withholding at the source instead of making you file two returns and reconcile them after the fact.