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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.
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.
Federal and state employees whose total salary from all employment during the taxable year is $15,000 or less may subtract up to $15,000 of the salary received from a federal or state government job. Virginia employees working in universities, colleges and community colleges who are eligible for the subtraction include, but are not limited to: Virginia employees of state-supported institutions of higher education in the Commonwealth, and employees of publicly supported comprehensive community colleges. Federal employees who are not eligible for the subtraction include but are not limited to the following: Members of the active or reserve components of Army, Navy, Air Force, or Marines, National Guard of Virginia, any other state, or District of Columbia. Additionally, local government employees and United States Postal Service employees are not eligible for the subtraction. If the total salaries reported exceed $15,000, you may not claim the subtraction. For example, an individual who earned $10,000 in a federal or state government job and $15,000 in a private sector job during the taxable year 2005 would NOT be eligible for the subtraction. Unearned income, such as pensions and annuities, is not considered in determining eligibility for the subtraction. For example, an individual who received federal or state government wages of $14,000 and pension income of $35,000 during the taxable year WOULD be eligible to claim the subtraction. Report on Schedule ADJ, Line 6, Code 39. Code of Virginia Section 58.1-322 [C] [24]
Individuals may claim a subtraction for income resulting from the return or replacement of assets stolen during the Holocaust and throughout the time period leading up to, during, and directly after World War II, if that income was included in federal adjusted gross income. The subtraction is the amount of income from the return or replacement of assets that has not been deducted or excluded from income on your federal return. Report on Schedule ADJ, Line 6, Code 40. Code of Virginia Section 58.1-322 [C] [28]
Individuals and corporations may subtract income received as the result of payments from the Tobacco Master Settlement Agreement, the National Tobacco Grower Settlement Trust, or the Tobacco Loss Assistance Program. Report on Schedule ADJ, Line 6, Code 41. Code of Virginia Section 58.1-322 [C] [27]
Individuals and corporations may subtract the gain on the sale of land to an organization that dedicates the land for open-space use. The amount of the subtraction is the gain included in federal adjusted gross income, not the gross sale amount. Report on Schedule ADJ, Line 6, Code 42. Code of Virginia Section 58.1-322 [C] [22]
Individuals may deduct the amount of contributions made to the Virginia Public School Construction Grants Program and Fund, to the extent the contributions were not deducted for federal purposes. The amount of the subtraction is the amount of the contribution less any amount deducted on your federal return. Report on Schedule ADJ, Line 6, Code 43. Code of Virginia Section 58.1-322 [D] [8]
Military retirement income received by individuals awarded the Congressional Medal of Honor can be subtracted from federal gross income. The amount of the subtraction is the amount of military retirement benefits reported in federal adjusted gross income. The subtraction does not apply to benefits received by a surviving spouse. Report on Schedule ADJ, Line 6, Code 44. Code of Virginia Section 58.1-322 [C] [26]
Virginia law requires certain subtractions from income as the result of fixed date conformity provisions. Report on Schedule ADJ, Line 6. Code of Virginia Section 58.1-301.
Retroactive to taxable year 2001, survivors of military personnel killed in the line of duty may claim a subtraction for military death gratuity payments made after September 11, 2001, to the extent that the payments were included in federal adjusted gross income. Report on Schedule ADJ, Line 7, Code 46. Code of Virginia Section 58.1-322(C)(31).
Qualified contract poultry growers and table egg producers may subtract indemnification payments received from the U.S. Department of Agriculture as a result of the depopulation of poultry flocks because of low pathogenic avian influenza in 2002. Please refer to Tax Bulletin 03-3 for details. Report on Schedule ADJ, Line 7, Code 45. Code of Virginia Section 58.1-322(C)(30).
Effective retroactively to taxable year 2002, corporations and individuals may subtract any gain recognized as a result of the payments made under the federal Peanut Quota Buyout Program of the Farm Security and Rural Investment Act of 2002. Any taxpayer receiving the buyout payment in installments will be allowed to subtract any gain from each payment as it is received. Any taxpayer receiving the buyout payment in a lump sum may subtract 20% of the gain in the year in which the payment was received and 20% of the gain in each of the next four succeeding taxable years. For details, please refer to Tax Bulletin 03-6. Report on Schedule ADJ, Line 7, Code 47. Code of Virginia Section 58.1-322(C)(29).
Effective for taxable years beginning on or after January 1, 2007, individuals may subtract death benefit payments received from an annuity contract to the extent that such payments are subject to federal income tax. Report on Schedule ADJ, Line 6, Code 49.Code of Virginia Section 58.1-322(C)(32).
Last Updated 7/20/2009 11:32
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