Virginia’s Military Benefits Subtraction (Military Retirement Subtraction) 

Can I subtract all of my eligible military benefits if I am age 55 or over?

No. In order to claim a Military Benefits Subtraction (also known as the Military Retirement Subtraction), the eligible military benefits subtracted must be included as income on your federal income tax return and you may only subtract up to:

  • $20,000 of eligible military benefits on your tax year 2023 return;
  • $30,000 of eligible military benefits on your tax year2024 return; and
  • $40,000 of eligible military benefits on your tax year 2025 and later returns.
How old do I have to be to claim the Military Benefits Subtraction? 

You must be 55 or older. Beginning with taxable year 2024 (returns usually filed in 2025,) you can subtract these benefits regardless of your age. 

What types of military benefits are eligible for the Military Benefits Subtraction? 

The following military benefits are eligible for the Military Benefits Subtraction: 

  • Military retirement income received for service in the Armed Forces of the United States; 
  • Benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States under the Survivor Benefit Plan program established by the U.S. Department of Defense; and 
  • Military benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States.

While Virginia law also allows the Military Benefits Subtraction for “qualified military benefits” as defined under federal tax law, these are not included as income on your federal and Virginia income tax returns. Since they’re already not part of your income, they cannot be subtracted at this time. 

Example: Taxpayer A is a 65-year-old military veteran who receives military benefits that include $10,000 in military pension income that was included in Taxpayer A’s federal income for tax purposes and $2,000 in travel benefits under Operation Hero Miles. Because the $2,000 in travel benefits under Operation Hero Miles are considered “qualified military benefits” under federal law, they were excluded from Taxpayer A’s federal income for tax purposes. Taxpayer A may subtract the $10,000 in military pension income benefits but may not subtract the $2,000 in travel benefits that were not included in Taxpayer A’s federal income.

May I take both the Military Benefits Subtraction and the Disability Income Subtraction on the same return?

Yes. To the extent you qualify for both:

  • You may take both a Military Benefits Subtraction and a Disability Income Subtraction on the same return. 
  • However, you may not use the same income for both the Military Benefits Subtraction and the Disability Income Subtraction.

Example: Taxpayer A is 60 years old and receives $10,000 in military pension income and $2,000 in disability income that are both included in Taxpayer A’s income for federal tax purposes. Taxpayer A may take a $10,000 Military Benefits Subtraction and a $2,000 Disability Income Subtraction. 

Example: Taxpayer A is 60 years old and receives $10,000 in benefits that are included in Taxpayer A’s federal income for tax purposes. Such income qualifies for both the Military Benefits Subtraction and the Disability Income Subtraction. Taxpayer A must choose either a $10,000 Military Benefits Subtraction or a $10,000 Disability Income Subtraction. Taxpayer A cannot take both the Military Benefits Subtraction and the Disability Income Subtraction for the same $10,000 of income. 

May I take both the Military Benefits Subtraction and the Age Deduction on the same return?

Yes. To the extent you qualify for both, you may take both the Military Benefits Subtraction and the Age Deduction. 

I have a Thrift Savings Plan (“TSP”). Are distributions from my TSP account eligible military benefits for which I may claim the Military Benefits Subtraction?

No. Distributions from TSP or similar accounts are not eligible military benefits. As a result, you may not claim the Military Benefits Subtraction for income attributable to such distributions.

I waived my military retirement benefits to have my service years count toward credit in the Civil Service Retirement System (“CSRS”) or Federal Employees Retirement System (“FERS”). Are my CSRS or FERS benefits eligible?

No. CSRS, FERS, and other non-military retirement benefits are not eligible military benefits for purposes of the subtraction. As a result, you may not claim the Military Benefits Subtraction for income attributable to such benefits. Non-military benefits do not become military benefits when they are received by taxpayers who have “rolled-over” their military service years into a non-military retirement system. See "What types of military benefits are eligible for the Military Benefits Subtraction?" above for a list of eligible military benefits. 

I'm married. Can my spouse and I both claim the maximum amount of the Military Benefits Subtraction permitted?

Yes, both spouses may subtract the maximum amount of the Military Benefits Subtraction to the extent that each spouse is the recipient of eligible military benefits.

Example: Spouse A and Spouse B are both over age 55 and each receive $45,000 in military pension income, for a total of $90,000 in military pension income. On their joint return, Spouse A and Spouse B are each eligible for the maximum Military Benefits Subtraction of $20,000 each for tax year 2023 for a total Military Benefits Subtraction of $40,000.

Example:  Spouse A receives $30,000 in military pension income and Spouse B received $5,000 in military pension income for a total of $35,000 in military pension income. The maximum subtraction for tax year 2023 is $20,000. On their joint return, Spouse A may claim a maximum Military Benefits Subtraction of $10,000, but Spouse B’s Military Benefits Subtraction is limited to the amount of military benefits received by Spouse B. As a result, Spouse B may claim a $5,000 Military Benefits Subtraction for a total Military Benefits Subtraction of $25,000.

I'm married, and file a joint return with my spouse. I am 55 or older, but my spouse is younger than 55. Can I still claim the Military Benefits Subtraction for my military benefits, even though my spouse does not meet the age requirement?

Yes, you may claim the Military Benefits Subtraction for eligible military benefits that you receive. Your spouse may not claim the subtraction for any eligible military benefits that they receive since they do not meet the age requirement yet. 

Example: Spouse A is 60 years old, but Spouse B is 50 years old. Each spouse receives $30,000 in military pension income, for a total of $60,000 in military pension income. The maximum subtraction for tax year 2023 is $20,000. On their joint return, Spouse A may claim a subtraction of $20,000. Because Spouse B is 50 years old, they do not meet the age requirement, and cannot claim a Military Benefits Subtraction for their income this year.  

Beginning with taxable year 2024 (returns usually filed in 2025,) your spouse will be able to subtract these benefits regardless of their age. 

I am divorced from my Armed Forces service member spouse. Can I still take the Military Benefits Subtraction?

Yes. As long as you are over age 55, the benefits you receive are eligible military benefits, and such benefits were included in your federal income for tax purposes, you may claim this subtraction. See "What types of military benefits are eligible for the Military Benefits Subtraction?" above for a list of eligible military benefits.

Beginning with taxable year 2024 (returns usually filed in 2025,) you can subtract these benefits regardless of your age. 

What if I’m not sure whether my specific situation qualifies for the subtraction?

Please contact a tax professional if you have additional questions regarding whether your specific situation qualifies for the subtraction.