View Our ExpensesVirginia Subtractions From Income
The starting point for computing Virginia taxable income is federal adjusted gross income. Virginia law specifically exempts from income tax certain types of income that may have been reported in federal adjusted gross income. Those items should be subtracted in computing Virginia taxable income. The allowable subtractions are listed below.
- Age Deduction for Taxpayers Age 62 and Over
- Social Security Act and Equivalent Tier 1 Railroad Retirement Act Benefits
- State Income Tax Refund or Overpayment Credit
- Obligations of the U.S.
- Disability Income
- Income from Virginia Obligations
- Federal Work Opportunity Tax Credit Wages
- Tier 2 and other Railroad Retirement and Railroad Unemployment Benefits
- Virginia Lottery Prizes
- Virginia National Guard Income
- Operation Joint Endeavor Combat Pay
- Military Pay and Allowances for Service in a Combat Zone or a Qualified Hazardous Duty Area
- Retirement Plan Income Previously Taxed by Another State
- Virginia College Savings Plan Income Distribution or Refund
- Unemployment Compensation Benefits
- First $15,000 of Basic Military Pay
- Federal and State Employees
- Income Received by Holocaust Victims
- Payments Made Under the Tobacco Settlement
- Gain on the Sale of Land for Open Space Use
- Pension income of Medal of Honor Recipients
- Fixed Date Conformity Subtractions
- Military Death Gratuity Payments
- Avian Influenza Indemnification Payments
- Gains from Peanut Quota Buyout Program
- Subtraction for Certain Death Benefits
Virginia law also provides for a number of deductions in computing Virginia taxable income. Be sure to review those provisions before completing your income tax return.
Income from Virginia Obligations
If interest on a Virginia state or municipal obligation or gains from sales of those obligations must be included in federal adjusted gross income, the income may be subtracted in computing Virginia taxable income. The amount to be subtracted is the amount of income included in federal adjusted gross income, less related expenses deducted on the federal return. For information on obligations that qualify for the subtraction, see PD 94-281. Report on Schedule ADJ, Line 6, Code 20. Code of Virginia Section 58.1-322 [C] [2]
Federal Work Opportunity Tax Credit Wages
Federal law allows a credit for wages paid to certain employees. If the credit is claimed, those wages cannot be deducted as an expense on the federal income tax return. Virginia law does not provide a corresponding credit, but allows a subtraction for the wages that were not deductible on the federal return. The amount to be subtracted is the amount of wages or salaries eligible for the federal work opportunity tax credit that were not deducted for federal income tax purposes. Report on Schedule ADJ, Line 6, Code 21. Code of Virginia Section 58.1-322 [C] [6]
Tier 2 and other Railroad Retirement and Railroad Unemployment Benefits
Federal and Virginia law exempt Tier 2 vested dual benefits, as well as certain other Railroad Retirement Act benefits and Railroad Unemployment Insurance benefits from income tax. The amount to be subtracted is the benefit amount that was included in federal adjusted gross income as a taxable pension or annuity, and that was not already deducted on your federal return. Report on Schedule ADJ, Line 6, Code 22. Code of Virginia Section 58.1-322 [C] [4]
Virginia Lottery Prizes
Any Virginia Lottery prize of less than $600 that has been included in federal adjusted gross income may be subtracted on the Virginia return. If more than one prize has been received, each prize of less than $600 may be subtracted. Report on Schedule ADJ, Line 6, Code 24. Code of Virginia Section 58.1-322 [C] [10]
Last Updated 1/14/2013 17:12