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Virginia Taxes
THE STATE IS FRIENDLY TO TAXPAYERS
State taxes can be a big factor in choosing
a retirement location. Choosing a State that
has no income tax may seem like a no-brainer,
but States must get their income somewhere.
Some no-income-tax States have higher sales and
property taxes, or impose certain licensing or
excise taxes, and these can more than offset
the benefits of no tax on income
Although Virginia has a State income tax,
its relatively low sales tax and certain
deductions can make living in Virginia a
stress-free choice. Virginia’s 5% sales tax
includes a statewide local tax of 1%. The rate
compares favorably with other States’.
California’s rate, for example, is 7.25%, and
nearby West Virginia imposes 6%. Prescription
and non-prescription drugs in Virginia are tax
exempt, and although food purchased for home
consumption is taxed at 1.5%, Virginia’s tax on
gasoline at 20 cents per gallon is one of the
lowest in the nation. Cigarette tax is a low 30
cents per pack of 20.
Of special interest to seniors are
Virginia’s tax breaks for a.) long term care
and b.) disability. Long-term health care
insurance premiums are deductible, provided the
premiums have not been deducted for federal
income tax purposes and have been paid
specifically for a long-term health care
policy. Persons with disability may apply
for tax credit under the new (2008) Livable
Home Tax Credit program. A credit, which is
limited to $500 per taxable year, may be
applied to the cost of retrofitting existing
housing or incorporating into new construction
features that improve accessibility and/or
visibility. They must meet eligibility
guidelines established by the Virginia
Department of Housing and Community
Development
Personal income taxation varies from 2.0% to
5.75%. The State’s four income brackets range
from lowest ($3,000) to highest ($17,000).
Personal Exemptions: Single - $930; Married -
$1,860; Dependents - $930. Standard Deductions:
Single - $3,000; Married filing jointly -
$5,000. Taxpayers age 65 and older are eligible
for a deduction of $12,000, subject to certain
limitations. The deduction is reduced by
one dollar for each dollar income above the
following thresholds: single - $50,000, married
- $75,000 (total for both), married filing
separately - $75,000 (total for
both). Virginia law exempts Social
Security and Tier 1 Railroad Retirement
benefits from taxation. These benefits,
although included in the federal adjusted gross
income, may be subtracted on Virginia
returns.
Virginia residents’ pension income is
taxable by Virginia, even though it may be
received from another state. Federal
legislation prohibits any state from taxing
pension payments made to a resident of another
state, preventing taxation from two states on
the same amount. Taxation for retired military
personnel follows federal tax rules. Retirees
who entered the military before Sept. 24, 1975,
and members receiving or eligible for Veteran’s
Administration disability retirements are
covered by laws giving disability broad
exemption from federal income tax, and thus
from Virginia tax.
Property taxes variously administered by the
State's cities, counties and towns are based on
100% of fair market value. Real estate taxes
and Personal Property Taxes for Shenandoah
residents are regulated by the office of the
Frederick County Treasurer. The Frederick
County real estate tax rate is $ 0.525 per
$100.00 of assessed value. The County
Commissioner of Revenue (540-665-5680)
administers a tax relief program for the
elderly, which is based on income and net
worth. This applies to real estate taxes only.
Personal property tax is levied by the County
at $4.20 per $100.00 of assessed
value.
The Board of Supervisors establishes a tax
rate for real estate every Spring when it
adopts the coming fiscal year’s budget. The
rate applied for 2008 is 52.5 cents per $100 of
value. To compute the real estate tax on a
property assessed at $175,000, for example,
divide the assessed value by 100 and multiply
by the tax rate:
175,000 / 100 =
1750 X .525 = $918.75.
For further information, visit the Virginia
Department of Taxation site or call
804-367-367-8031.
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