Virginia Taxes
THE STATE IS FRIENDLY TO TAXPAYERS
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 2.5%, Virginia’s tax on gasoline 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 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 $ 0.51 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 $4.86 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 in 2010 is 51.0 cents per $100 of value (down from 2009′s 52.75). 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 .51 = $892.50.
For further information, visit the Virginia Department of Taxation website or call 804-367-8031.
