Retiring in Virginia? What to Know About Social Security and Taxes

Whether you're already living in Virginia or considering a move, understanding how the Commonwealth taxes Social Security and retirement income is key to building a tax-efficient retirement strategy. From age-based deductions to new tax breaks for veterans, Virginia offers a mix of retiree-friendly benefits – and a few caveats to plan for.

Let’s explore what to expect and how to make the most of your income in retirement.

SOCIAL SECURITY INCOME

Virginia does not tax Social Security benefits. That includes:

• Retirement benefits
• Spousal and survivor benefits
• Disability benefits
• Supplemental Security Income

No matter your income level, your Social Security benefits are safe from state income tax – which helps put more money directly into your pocket.

OTHER RETIREMENT INCOME: AGE-BASED DEDUCTIONS

While Virginia generally taxes retirement income beyond Social Security, it offers a valuable tax break for older residents: the age-based deduction.

If you're 65 or older, you may qualify for up to $12,000 per person in deductions on income from sources like:

• Traditional IRA or 401k withdrawals
• Pension payments
• Taxable annuities

However, the full deduction is only available to individuals with income less than $50,000 or to couples with income less than $75,000. Above those thresholds, the deduction begins to phase out.

It's also worth noting that qualified Roth IRA withdrawals remain completely tax-free at both the federal and state level – and don’t count toward your AGI, which can help preserve your eligibility for this deduction.

MILITARY RETIREES

Virginia offers a military retirement income deduction of up to $40,000 per year – a meaningful benefit for veterans that not all states provide.

Why it matters:

• Applies to military pension income, regardless of where you served
• Can be combined with Social Security exemptions and senior deductions
• Offers long-term tax savings on guaranteed income
• Especially valuable for dual-military households or blended income plans

If you’re a veteran living in Virginia or planning a move in the future, this deduction can be a powerful tool in building a more tax-efficient retirement strategy.

FEDERAL TAXES STILL APPLY TO SOCIAL SECURITY

Virginia doesn’t tax Social Security, but the IRS may tax up to 85% of your benefits, depending on your provisional income, which is your AGI plus 50% of your Social Security benefits plus tax-exempt interest.

Here’s how it works:

Federal Taxation Thresholds for Social Security

With smart income planning – including how and when you draw from IRAs or other accounts – you can help reduce how much of your Social Security is taxed at the federal level.

WATCH FOR THE “TAX CROSSOVER POINT”

Even though Virginia doesn’t tax Social Security, federal taxes can still apply – especially if you're drawing from tax-deferred accounts like traditional IRAs or 401ks.

This often happens when withdrawals or required minimum distributions push your provisional income above IRS thresholds, causing a larger portion of your Social Security to become taxable. That tipping point is sometimes called the “tax crossover point.”

WHAT YOU CAN DO:

• Plan withdrawals carefully to avoid bumping into higher tax brackets
• Use Roth accounts or other tax-free sources of income when possible
• Time your Social Security benefits to align with lower-income years

With the right strategy, it’s possible to delay – or even avoid – crossing this line and triggering extra federal taxes on your benefits.

STILL EARNING? VIRGINIA’S GRADUATED TAX RATES MAY HELP

If you’re consulting, freelancing or working part-time in retirement, Virginia’s income tax structure may work to your advantage.

Unlike flat-tax states, Virginia applies lower rates (starting at 2%) to lower levels of income. That means you may be able to earn supplemental income without a dramatic jump in your state tax bill – especially if you keep your total income modest.

It’s another reason why retirees with flexible income sources often benefit from a personalized tax strategy that accounts for both federal and state rules.

PROPERTY TAXES: LOW AVERAGES, PLUS SENIOR RELIEF

With an average property tax rate of about 0.76%, Virginia sits below the national average, and that can help reduce long-term housing costs in retirement.

Many counties also offer property tax relief programs for seniors, which may include:

• Exemptions on part or all of your tax bill
• Deferrals that postpone payment until the home is sold
• Assessment freezes to lock in your home’s value

WHAT TO KNOW:

Eligibility is typically based on age, income or disability status, and most programs require you to apply in advance – often annually.

If staying in your home is part of your retirement plan, it’s worth contacting your local tax office early to learn what's available and how to qualify.

NO ESTATE OR INHERITANCE TAX

Virginia does not impose a state estate or inheritance tax, making it a more attractive option for high-net-worth retirees compared to states with lower thresholds.

However, federal estate tax rules still apply for estates exceeding the federal exemption (over $13 million per person in 2025).

5 TAX-SAVVY STRATEGIES FOR RETIREES IN VIRGINIA

DELAY SOCIAL SECURITY

Waiting until age 70 to take Social Security means a higher monthly check – and may give you more room to draw from IRAs at lower tax rates first.

TAP ROTH ACCOUNTS TO STAY UNDER THRESHOLDS

Qualified Roth distributions don’t impact your AGI or Social Security tax thresholds, giving you flexibility to control your taxable income.

COORDINATE WITH THE AGE-BASED DEDUCTION

Make sure to structure withdrawals to stay below $50,000 (single)/$75,000 (joint), so you can claim Virginia’s full senior deduction.

USE QUALIFIED CHARITABLE DISTRIBUTIONS (QCDs)

At age 70½, you can donate up to $100,000 from your IRA directly to charity – satisfying RMDs without increasing your taxable income.

CONSIDER GRADUAL ROTH CONVERSIONS

Converting portions of your traditional IRA to Roth over several years can help manage long-term tax exposure and reduce future RMDs.

PLANNING TO RETIRE IN VIRGINIA? ESTABLISH RESIDENCY EARLY

To benefit from Virginia’s retiree tax rules, make sure your residency is clear. Steps may include:

• Spending at least 183 days per year in Virginia
• Updating your driver’s license, voter registration and tax filings
• Revising your legal documents to reflect Virginia as your permanent home

This is especially important if you’re splitting time between states with different tax laws.

PLAN SMART TO MAKE YOUR RETIREMENT INCOME LAST

Retiring in Virginia offers valuable state tax perks, including untaxed Social Security, senior deductions and no estate tax, but thoughtful planning is still a smart move. At Edelman Financial Engines, we help you build personalized, tax-smart retirement strategies that align with your goals. From Social Security timing to withdrawal coordination, our planners can help you make your retirement income work harder, wherever you live.