Virginia retired pay
Is military retirement taxed in Virginia?
Partly taxed
$40,000 Off Per Retiree, Any Age.
Partly. For tax year 2025 and later, Virginia lets each recipient subtract up to $40,000 of military retirement income, and since tax year 2024 there is no age test. Retired pay above $40,000 is taxed at Virginia's regular rates, which top out at 5.75%.
- The law
- Va. Code § 58.1-322.02, subdivision 18 c
- Current rule since
- tax year 2025 ($40,000 at any age); $30,000 for 2024 at any age; $20,000 for 2023 and $10,000 for 2022, age 55 and older only
- Where you claim it
- Schedule ADJ, Lines 6b to 6d: subtraction code 60 (Military Benefits Subtraction) and the amount; the Schedule ADJ total goes to Form 760, Line 7
Read on Virginia’s own sources October 9, 2026
What Virginia’s rule is worth on your retired pay
Enter your annual taxable retired pay (box 2a of your DFAS or Coast Guard 1099-R). The rate starts at Virginia’s top 5.75% rate (on taxable income over $17,000) for tax year 2025; change it to your own bracket if you know it.
One rate applied to the whole amount, not Virginia’s full return: brackets, other income, deductions and credits change the real figure. Use it to compare, then check the state’s own form instructions.
How it works in Virginia
Start from the 1099-R that DFAS sends you. Virginia's subtraction reaches only military retirement income that is already in your federal adjusted gross income, so the taxable amount on that 1099-R is your ceiling. On the 2025 Schedule ADJ, use one of Lines 6b to 6d: write code 60 in the code box and enter the smaller of your taxable military retirement or $40,000. Add Lines 4 through 6d and carry the total to Line 7 of Form 760.
Each spouse has a separate $40,000 limit. When both spouses on a joint return draw military retired pay, each subtracts up to $40,000 of his or her own benefits, so a two-retiree household can take $80,000 off one Virginia return. Unused room does not transfer: in Virginia Tax's own FAQ example, a spouse with $5,000 of pension can subtract only that $5,000, even though the other spouse's pay runs over the cap.
Code 60 can sit on the same return as Virginia's age deduction and the disability income subtraction, but no dollar can be counted twice. Thrift Savings Plan withdrawals are not military benefits under the FAQ. Neither are CSRS or FERS annuities, even for a retiree who waived military retired pay to fold military years into civil service credit.
On an assumed $55,000 pension, $40,000 comes off and $15,000 stays taxable for 2025. At the 5.75% rate that applies to taxable income over $17,000, the subtraction is worth about $2,300 a year. On an assumed $36,000 pension, the whole amount comes off.
If an earlier return left the subtraction out, file an amended Form 760, fill in the amended return oval, and enter reason code 04 (changes to subtractions, deductions, additions and credits). Use the limit for that year: $30,000 at any age for 2024, and $20,000 for 2023 only if you were 55 or older. The refund window is 3 years from that return's original due date plus any valid extension; the 2025 return was due May 1, 2026.
Survivor Benefit Plan annuities
Included. Va. Code § 58.1-322.02 counts Survivor Benefit Plan payments to the surviving spouse of a veteran, and other military benefits paid to a surviving spouse, as military benefits, so a surviving spouse can subtract up to $40,000 for 2025 under the same code 60 (Virginia Tax FAQ and 2025 Form 760 instructions, read October 9, 2026).
Active-duty pay in Virginia
Taxed, with three subtractions: up to $15,000 of basic pay for extended active duty over 90 days (reduced dollar for dollar above $15,000 of basic pay and zero at $30,000), combat zone pay, and Virginia National Guard pay for O6 and below, capped at 39 days of pay or $5,500, whichever is less.
Missed it in an earlier year?
Virginia Tax issues a refund on an amended return only if it is filed within 3 years from the due date of the original return, including valid filing extensions, with longer windows after a federal or other-state change (2025 Form 760 instructions).
What trips Virginia retirees up
- Virginia Tax's Military Tax Tips page still describes the Tax Year 2024 subtraction of up to $30,000 (read October 9, 2026). The Military Benefits Subtraction FAQ and the 2025 Form 760 instructions carry the $40,000 figure for 2025 and later, so file from those.
- A Medal of Honor recipient subtracts all military retirement income under subdivision 18 a of the statute, reported with Schedule ADJ code 44 rather than code 60.
- A divorced former spouse who receives eligible military benefits included in federal income can also take the code 60 subtraction, according to the Virginia Tax FAQ.
Federal side: DFAS reports retired pay on Form 1099-R, and the IRS taxes it as a pension. VA disability compensation is not taxable income under federal law (IRS Publication 525). The SCRA’s tax-home rule (50 U.S.C. § 4001) protects servicemembers on orders, not retirees, so where a retiree lives decides which state taxes the pension. Compare every state on the 51-state ledger. Virginia’s other servicemember protections are on the Virginia SCRA page.
Frequently asked questions
Does Virginia tax military retirement pay?
Only the part above $40,000. For tax year 2025 and later, Va. Code § 58.1-322.02 lets each recipient subtract up to $40,000 of military retirement income that was included in federal income. The limit was $30,000 for 2024. Since 2024 there is no age requirement; the 2022 and 2023 subtractions applied only at age 55 or older. You claim it on Schedule ADJ with subtraction code 60, according to the 2025 Form 760 instructions read October 9, 2026. Anything above the cap is taxed at Virginia's graduated rates, with 5.75% on taxable income over $17,000.
Is SBP taxed in Virginia?
Survivor Benefit Plan payments to the surviving spouse of a veteran count as military benefits under Va. Code § 58.1-322.02, so they share the same subtraction: up to $40,000 for tax year 2025 and later. Virginia Tax's Military Benefits Subtraction FAQ lists SBP payments and other military benefits paid to a surviving spouse as eligible. The surviving spouse claims it on Schedule ADJ with code 60. Benefits that were never in federal income, such as Dependency and Indemnity Compensation, cannot be subtracted because they were never taxed.
Can both spouses take the Virginia military subtraction?
Yes, if both receive military benefits. The 2025 Form 760 instructions say each spouse on a joint return may take the maximum subtraction for his or her own qualifying benefits, so two retirees can subtract up to $40,000 each for 2025. The limit is personal, though. A spouse who receives $5,000 subtracts $5,000, and that spouse's unused room cannot absorb the other spouse's pay above $40,000. Each spouse's amount goes on its own code 60 entry on Schedule ADJ.
Can I amend an old Virginia return to claim the military subtraction?
Yes, within the refund window. The 2025 Form 760 instructions say Virginia Tax refunds an amended return only if it is filed within 3 years of the original return's due date, including valid extensions, with longer periods after federal or other-state changes. File an amended Form 760, fill in the amended return oval, and use reason code 04. Apply the rule for the year you are fixing: $30,000 at any age for 2024, or $20,000 for 2023 if you were at least 55.
Sources, read October 9, 2026
Heads up: SCRA Saver publishes general information, not legal or financial advice. Laws change and every situation differs. Confirm details with your installation legal assistance office (free for service members) or a licensed professional.