Virginia does not tax Social Security benefits. If any portion of your benefits was taxed federally and pulled into your Federal Adjusted Gross Income, Virginia lets you subtract the full amount when calculating your state taxable income. The exemption applies regardless of your age, filing status, or how much you receive.
How the Exemption Works
Virginia’s income tax calculation starts from your Federal Adjusted Gross Income (FAGI). Because the IRS can tax up to 85% of Social Security benefits at higher income levels, some of your benefits may already be sitting inside that FAGI figure by the time it reaches your state return. Without an adjustment, Virginia would tax that portion too.
State law prevents that outcome with a dedicated subtraction. All benefits received under Title II of the Social Security Act, along with any amounts taxed solely under Section 86 of the Internal Revenue Code, come off your Virginia taxable income.1Virginia Code Commission. Virginia Code 58.1-322.02 – Virginia Taxable Income; Subtractions Whatever the federal government counted, Virginia removes.
What About Railroad Retirement Benefits
Tier 1 Railroad Retirement benefits qualify for the same subtraction because federal tax law treats them like Social Security.2Virginia Department of Taxation. Virginia Taxes and Your Retirement Tier 2 Railroad Retirement benefits do not. The federal government treats Tier 2 as a private pension rather than a Social Security equivalent, so those amounts stay in your Virginia taxable income.3RRB.Gov. Federal Income Tax and Railroad Retirement Benefits Tier 2 benefits may qualify for the age deduction discussed below.
Federal Tax Still Applies
Virginia’s rule does not affect what the IRS does. If your “combined income” — half your Social Security plus other income plus tax-exempt interest — crosses federal thresholds, up to 85% of your benefits remain federally taxable.4Internal Revenue Service. Social Security Income The thresholds start at $25,000 for single filers and $32,000 for married couples filing jointly. Virginia simply refuses to add its own tax on top.
Claiming the Subtraction on Form 760
You claim the subtraction on Line 5 of Virginia’s Resident Individual Income Tax Return, Form 760. Enter the exact amount of Social Security and Tier 1 Railroad Retirement benefits that was included in your FAGI. Complete your federal return first, since the Virginia calculation depends on that number.5Virginia Department of Taxation. 2025 Form 760 Resident Individual Income Tax Instructions
Keep your Form SSA-1099, which the Social Security Administration mails each January and shows total benefits received plus any federal tax withheld.6Social Security Administration. Get Your Social Security Benefit Statement (SSA-1099) Railroad Retirement recipients receive Form RRB-1099. These are your backup if the state ever questions the amounts.
Other Retirement Income Is Different
Pensions, 401(k) withdrawals, and traditional IRA distributions do flow into your Virginia taxable income. Virginia offers a separate age deduction of up to $12,000 per qualifying person to offset some of that.7Virginia Code Commission. Virginia Code 58.1-322.03 – Virginia Taxable Income; Deductions You must have reached age 65 during the tax year. If you were born on or before January 1, 1939, you receive the full $12,000 with no income-based phase-out. If you were born after that date, the maximum phases out as income rises: for single filers, the deduction shrinks dollar-for-dollar on income above $50,000 and disappears at $62,000; for married couples filing jointly, phase-out runs from $75,000 to $99,000 in combined income.
The phase-out calculation uses Adjusted FAGI, which excludes your federally taxed Social Security and Tier 1 Railroad Retirement. Your benefit income doesn’t count against you when Virginia checks the threshold.
One trade-off matters: you cannot claim the age deduction if you or your spouse claims the Credit for Low-Income Individuals, the Virginia Earned Income Credit, or the disability income subtraction. Pick whichever produces the larger benefit.
Watch for Estimated Payments
If no employer is withholding Virginia tax from your income, and your state tax liability after withholding and credits is expected to exceed $150, you must make quarterly estimated payments.8Virginia Department of Taxation. Individual Estimated Tax Payments Virginia’s deadlines are May 1, June 15, September 15, and January 15 of the following year.
To avoid an underpayment penalty, your payments plus withholding must cover at least 90% of your current-year Virginia tax, or match your prior year’s total Virginia liability under the state’s safe harbor.9Virginia Department of Taxation. 2025 Form 760ES – Estimated Income Tax Payment Voucher Many retirees skip the quarterly filings entirely by asking their pension or IRA administrator to withhold tax directly from distributions using federal Form W-4P.