Last Updated: April 2026
Virginia is home to more federal civilian workers than any other state — approximately 140,000 federal employees, plus a massive military presence and the defense contractor ecosystem of Northern Virginia. This demographic shapes Virginia’s tax profile: a progressive income tax structure where the brackets are so compressed that effectively everyone with income above $17,000 pays the top 5.75% rate, combined with a full military retirement pay exemption and a $8,000/$16,000 standard deduction.
This guide covers Virginia’s income tax structure and why its progressivity is largely theoretical, the military pay exemption, the higher Northern Virginia sales tax, property taxes (with Fairfax County among the higher rates), the age-based deduction for seniors, and why Virginia is a popular home base for federal employees and military retirees despite a moderately high income tax rate.
Virginia uses a four-bracket progressive income tax structure, but the brackets are extremely compressed compared to other progressive states:
In practice, a Virginia resident earning $60,000 pays: 2% on $3,000 ($60), 3% on $2,000 ($60), 5% on $12,000 ($600), and 5.75% on the remaining $43,000 ($2,473). The total is $3,193 — an effective rate of 5.32%. For a $200,000 earner, the effective rate is approximately 5.6%. The compressed brackets mean the ‘progressive’ label is largely theoretical — this functions almost as a flat 5.75% tax for most working Virginians.
Virginia does not conform to the federal standard deduction. Instead, Virginia has its own standard deduction:
These deductions are smaller than the federal standard deduction, meaning Virginia taxable income is typically higher than federal taxable income for standard deduction filers.
Virginia fully exempts military compensation from Virginia income tax. This includes active duty military pay, National Guard and Reserve pay for active service, and since 2022, all military retirement pay (previously only partially exempt up to $20,000). Virginia’s large military presence — with bases including Joint Base Myer-Henderson Hall, Fort Belvoir, Quantico, Langley, and multiple naval installations in Hampton Roads — makes this a significant benefit for a large portion of the Virginia population.
| Annual Income | Virginia (5.75% effective) | Maryland (up to 9.45% combined) | North Carolina (4.75% flat) | Tennessee (no income tax) |
|---|---|---|---|---|
| $75,000 | ~$3,800 | ~$5,800 | ~$3,050 | $0 |
| $150,000 | ~$8,175 | ~$13,400 | ~$6,600 | $0 |
| $300,000 | ~$16,925 | ~$27,500 | ~$13,850 | $0 |
| $500,000 | ~$28,300 | ~$46,400 | ~$23,200 | $0 |
Approximate estimates after standard deductions. Actual amounts depend on filing status and deductions. Maryland figures include typical Montgomery/Prince George’s county tax.
Virginia property taxes are administered entirely at the local level — there is no state property tax. The statewide effective average is approximately 0.82%, but Northern Virginia localities significantly exceed this:
For context: a $700,000 Fairfax County home might pay approximately $7,000–7,350/year in property tax. A $400,000 Virginia Beach home might pay approximately $3,360/year. Virginia does not offer a traditional Homestead Exemption, but localities may offer various relief programs for seniors and disabled residents.
Virginia’s general sales tax structure:
The NOVA premium means Amazon HQ2 employees, defense contractors, and government workers in Fairfax and Arlington face a slightly higher consumption tax than those in Richmond or Roanoke.
Virginia has no state estate tax and no inheritance tax. This is a significant advantage relative to neighboring Maryland, which imposes both an estate tax (above $5M) and has no portability. Virginia residents can transfer assets to heirs without any Virginia-level estate or inheritance tax, subject only to the federal estate tax (above the federal exemption threshold of $13.61M per person in 2024).
Virginia hosts more federal civilian employees than any other state — approximately 140,000, concentrated in Northern Virginia (Pentagon, intelligence agencies, defense contractors in the Fairfax/Arlington corridor). The federal government does not exempt its civilian employees from state income tax — federal workers pay Virginia income tax at up to 5.75% on their federal salary. However, federal workers who retire with a Civil Service Retirement System (CSRS) or Federal Employees Retirement System (FERS) pension benefit from Virginia’s age deduction for residents 65+.
Virginia residents aged 65 and older can deduct up to $12,000 of income from their Virginia taxable income — subject to an income limitation. The deduction phases out for individuals with income above $50,000 and for married couples above $75,000. This is not as generous as Colorado’s or Illinois’s retirement income exemptions, but provides meaningful relief for moderate-income retirees in Virginia.
Virginia is known for aggressively asserting income tax jurisdiction over taxpayers who have not clearly severed Virginia domicile. Virginia-domiciled taxpayers living abroad may remain subject to Virginia income tax on worldwide income. Key factors Virginia considers: maintaining a Virginia driver’s license; voter registration in Virginia; Virginia property ownership; professional licenses registered in Virginia; and the intent to return to Virginia. Military personnel with Virginia domicile who are stationed abroad generally continue to owe Virginia income tax on non-military income (military pay itself is exempt). Expats who have made Virginia their legal home of record should consult a tax professional before assuming they have left Virginia’s tax jurisdiction.
| Income Type | Virginia Tax Treatment |
|---|---|
| Military retirement pay | Fully exempt |
| Social Security | Not specifically exempt; but age deduction ($12,000 for 65+) applies |
| Federal CSRS/FERS pension | Taxed at 5.75%; partial relief via age deduction for 65+ |
| Private 401(k)/IRA | Taxed at 5.75%; partial relief via age deduction for 65+ |
| Virginia state employee pension | Taxed at 5.75%; partial relief via age deduction for 65+ |
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US Expat + Virginia Filing Help →Virginia’s income tax uses four brackets: 2% on income up to $3,000; 3% on $3,001–$5,000; 5% on $5,001–$17,000; and 5.75% on all income above $17,000. Because the brackets are so compressed, most working Virginians effectively pay close to the 5.75% top rate on the majority of their income. The standard deduction is $8,000 for single filers and $16,000 for married filers.
Yes, fully. Since 2022, all military retirement pay is completely exempt from Virginia income tax. Previously, only up to $20,000 was exempt. This full exemption makes Virginia significantly more attractive for military retirees, particularly given the concentration of military installations and retired military community in Northern Virginia, Hampton Roads, and the Quantico area.
Virginia does not specifically exempt Social Security from state income tax — unlike states such as Florida, Texas, or Illinois. However, Virginia residents aged 65 and older can claim an age deduction of up to $12,000 per person, which provides partial relief. This deduction phases out at higher income levels ($50,000 for single; $75,000 for married). Social Security income counts toward the threshold for this phase-out.
Northern Virginia has among the higher property tax rates in the state, averaging around 1.0–1.05% in Fairfax and Arlington counties. Given that Northern Virginia home values are very high (median prices of $600,000–$1 million+ in many areas), annual property tax bills of $6,000–$10,000+ are common for typical homes. Loudoun County, the fastest-growing county in the US in recent years, runs around 0.86% effective rate. There is no Virginia Homestead Exemption.
No to both. Virginia has no state estate tax and no inheritance tax. This is a meaningful advantage over neighboring Maryland, which has an estate tax (above $5M threshold with no portability). Virginia residents can pass assets to heirs without any state-level transfer tax. Only the federal estate tax applies (for estates above the federal exemption, roughly $13.6M per person in 2024).
Northern Virginia residents pay 6.0% combined sales tax (vs. 5.3% elsewhere in Virginia) due to a 0.7% regional transportation tax that applies across the NOVA area (Fairfax, Arlington, Alexandria, Prince William, Loudoun, and Manassas). The same 0.7% regional transportation premium also applies in Hampton Roads. These regional additions fund transportation infrastructure projects in Virginia’s most congested areas.
Federal civilian employees in Virginia are not exempt from Virginia state income tax — their federal salary is fully taxable by Virginia. With a $100,000 salary, you’d owe approximately $5,340 in Virginia state income tax (effective ~5.34% after the $8,000 standard deduction for single filers). For married couples filing jointly with the $16,000 standard deduction and a $150,000 combined income, effective Virginia tax is approximately $7,700. Military pay (active and retired) is fully exempt; civilian federal pay is not.