Virginia does not tax capital gains at a special rate. A gain from stocks, a business or real estate is part of your federal adjusted gross income, and Virginia taxes your whole Virginia taxable income on one graduated scale that starts at 2% and tops out at 5.75%. For most people with a sizeable gain, the 5.75% rate is the one that applies to the extra dollars.
This guide uses the Code of Virginia sections that set the rate, the residents, nonresidents and subtractions, the Virginia Tax 2025 Form 760 and Form 763 instructions, its 2026 Legislative Summary and two IRS pages, all read on 3 November 2026. Where the sources do not answer a question, the guide says so instead of guessing.
Section 58.1-320 of the Code of Virginia imposes the tax with a first bracket of two percent on income not exceeding $3,000, three percent on income over $3,000 up to $5,000, and five and three-quarters percent on income in excess of $17,000 for taxable years beginning on and after January 1, 1990. Virginia Tax's filing-status page says the income tax is imposed at graduated rates, ranging from 2% to 5.75%, and that the highest rate applies to taxable income over $17,000. The Department's 2025 Form 760 rate schedule fills in the middle: 3% over $3,000 up to $5,000 (tax $60 plus 3% of the excess over $3,000), 5% over $5,000 up to $17,000 ($120 plus 5% of the excess over $5,000), then $720 plus 5.75% of the amount over $17,000.
We checked the Department's 2026 Legislative Summary (published after the 2026 sessions) and found a standard deduction increase for later years, an extension of the earned income credit and a new fixed date for federal conformity, but no change to these rates. We did not find a published rate for 2027 or later, so confirm with Virginia Tax before planning a later sale.
Section 58.1-322 says the Virginia taxable income of a resident individual means the federal adjusted gross income for the taxable year, with modifications set out in the following sections. The Form 760 instructions say to enter federal adjusted gross income from your federal return and to be sure not to use federal taxable income. A capital gain that is reported on your federal return is therefore already in your starting figure, and Virginia then taxes it with the rest of your income. We read nothing in these pages that treats short-term and long-term gains differently.
The Form 760 instructions also say that Virginia replaced its suspended rolling conformity to the Internal Revenue Code with a fixed conformity date of December 31, 2025, so a federal rule enacted later may not flow into Virginia unless the Department says so.
Section 58.1-322.02 lists the subtractions from federal adjusted gross income. We found three that name a capital gain or a gain on property and are open to an ordinary taxpayer or a recent sale (others cover space launch and resupply gains, subdivisions 22 and 23, and an open-space land sale rule in subdivision 14 that applied only to taxable years before 2015):
We found no general subtraction for long-term capital gains, so an ordinary stock or property sale is taxed unless one of these narrow rules applies to you. The list is long and we read only the passages above for capital gains, so check the full section or a preparer for your case.
The federal system can tax a net capital gain at a lower rate than ordinary income. IRS Topic 409 says that if you have a net capital gain, a lower tax rate may apply than the rate that applies to your ordinary income, that you generally have a long-term gain if you hold the asset more than one year, and that net short-term capital gains are taxed as ordinary income at graduated rates. Virginia's rate schedule applies one scale to taxable income, and we found no holding-period or lower-rate rule in the Virginia sources.
These figures are our arithmetic, not an official calculation. The table multiplies the gain by 5.75%, which is the extra Virginia tax when your other taxable income is already above $17,000 so that the whole gain lands in the top bracket. It ignores credits, exemptions and adjustments, rounded to the nearest dollar.
| Capital gain included in federal AGI | Added Virginia tax at 5.75% |
|---|---|
| $10,000 | $575 |
| $50,000 | $2,875 |
| $100,000 | $5,750 |
| $500,000 | $28,750 |
Worked example (ours): a single filer has $60,000 of wages and a $50,000 long-term gain in 2026, takes the $8,750 standard deduction and claims no exemptions, other deductions or credits. Federal adjusted gross income is $110,000 and taxable income is $101,250. Using the schedule ($720 plus 5.75% of the amount over $17,000), the tax is $5,564. Without the gain, taxable income would be $51,250 and the tax $2,689. The gain adds $2,875. Real returns differ because of exemptions, itemized deductions, credits and other items on Form 760.
Section 58.1-322.03 gives a standard deduction of $8,750 for single individuals and $17,500 for married persons for taxable years beginning on and after January 1, 2025, but before January 1, 2027. The Department's 2026 Legislative Summary says the 2026 Appropriation Act increases it to $9,200 for single filers and $18,400 for married filers filing jointly for taxable years beginning in 2027. That is a next-year note and does not apply to a 2026 sale.
Section 58.1-325 says the Virginia taxable income of a nonresident individual is an amount bearing the same proportion to Virginia taxable income, computed as though a resident, as the net amount of income, gain, loss and deductions from Virginia sources bears to the net amount from all sources.
The Form 763 instructions say Virginia source income includes gains from sales, exchanges or other dispositions of real estate and intangible personal property having a situs in Virginia, and that it generally does not include personal savings account interest or dividends from an individual's stock market investments. They do not say in the passage we read how a nonresident should treat a gain on ordinary stock, so we do not state a rule for that. Virginia Tax also says nonresident owners that rent or sell real property in Virginia are required to register with the Department; read its registration page for the form and who must file.
Virginia starts from federal adjusted gross income, and we found no separate Virginia home sale rule. IRS Topic 701 says you may qualify to exclude up to $250,000 of the gain on the sale of your main home from your income, or up to $500,000 if you file a joint return with your spouse. Because excluded gain is not part of your income on the federal return, we read the effect as leaving only the gain above the exclusion for Virginia to tax; the Virginia pages we read do not say this in so many words. For the federal test, see our home sale capital gains guide.
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