VIRGINIA INCOME TAX: Definition and Rates

A tax is a financial charge or another type of levy that a government agency puts on a taxpayer (a person or legal entity) in order to pay for government spending and other public expenses (Wikipedia). But income tax is a tax that people or businesses (called “taxpayers”) have to pay on their income or profits (called “taxable income”). Most of the time, you multiply a tax rate by your taxable income to figure out your income tax. Learn everything you need to know about the income tax rate in Virginia here.

Tax rates can be different based on the type of taxpayer and the type of income. People who live in Virginia or make money in Virginia have to pay Virginia income tax on their taxable income.

What Is the Income Tax Rate in Virginia? 

The state of Virginia requires you to pay taxes if you’re a resident or nonresident that receives financial gain from a Virginia supply. The state revenue enhancement rates(income tax rate in Virginia) vary from 2% to 5.75%, and the general excise tax rate is 5.3% (which is 4.3% state tax and 1% local tax). Some regions could assess extra sales taxes.

However, certain tax deductions are given to taxpayers for certain conditions, which include the standard deduction, itemized deduction, dependent care credit deductions, credits for taxes paid to other states, and more.

Income Tax Deductions for Virginia

#1. Standard Deduction

The state of Virginia offers a customary and itemized deduction for taxpayers. The 2021 customary deduction permits taxpayers to scale back their rateable financial gain by $4,500 for single filers and $9,000 for married filing put-together filers.

Therefore, if you claim the quality deduction on your federal tax return, you also need to claim it on your Virginia return.

#2. Itemized Deductions

A taxpayer that itemizes deductions on their federal income tax should conjointly itemize them on their Virginia return. You’ll claim most of the similar itemized federal deductions on your Virginia come. 

#3. Child and Dependent Care Expenses 

Those who can claim a credit for caring for children and dependents on their federal return may claim it on their Virginia state instrument. You can subtract up to $3,000 for one dependent and up to $6,000 for two.

Financial Assistance for Foster Parents In Virginia can claim a $1,000 tax credit for each kid they care for who remains in their permanent custody.

#4. Bone Marrow Screening Fees

Subtract the cost of the associate’s initial screening to determine whether they are a suitable bone marrow donor, assuming the associate was not reimbursed and did not claim a tax credit for the cost. 

#5. Virginia Faculty Savings set up postpaid tuition contract payments and college savings account trust contributions

Individuals below age seventy on or before Dec. 31 of the rateable year will enter $4,000 or the number they contributed—whichever is less—to every Virginia529 account throughout the rateable year.

Those who contributed over $4,000 will shift any remaining quantity till the contribution is subtracted. Age seventy or older on Dec. 31, will deduct the complete quantity contributed throughout the rateable year.

#6. Continuing Teacher Education

Licensed primary or secondary academics will deduct up to twenty percent of reimbursed tuition prices for continuing teacher education courses, however, provided that the expenses weren’t subtracted from their federally adjusted gross financial gain.

#7. Long-Term Health Care Premiums 

You can deduct your semi-permanent care insurance premiums from your Virginia state taxes as long as you didn’t claim them as a federal tax deduction. 

#8. Virginia Public Faculty Construction Grants Program and Fund Deduction 

The total quantity contributed to the current program may be subtracted from your Virginia state instrument, granted it’s not claimed on your federal taxation come. 

#9. Sales Tax Paid on Energy Efficient Instrumentation or Appliances

Up to $500 can be deducted for the purchase of energy-efficient tools and appliances (such as a tankless water heater) for an individual taxpayer, and up to $1,000 for a married couple filing jointly.

#10. Organ and Tissue Donor Expenses 

Those who have unreimbursed expenses for organ and tissue donation will recover up to $5,000 of the costs; for married couples filing jointly, the deduction is restricted to $10,000. This may be solely subtracted from your Virginia state income if it isn’t subtracted from your federal come.

#11. Prepaid Funeral, Medical, and Dental Insurance Premiums

People aged sixty-six or older will deduct their postpaid ceremony insurance premiums or medical and dental insurance premiums for themselves or their dependents. They need to have an associate earned financial gain of a minimum of $20,000 for the year and a federal adjusted financial gain of $30,000 or less.

#12. ABLEnow Account Contributions 

Up to $2,000 of ABLEnow account contributions may be subtracted on Virginia state taxes p.a. Any quantity over may be carried forward and subtracted in future years. Those aged seventy or older will deduct the complete quantity contributed.

Is Virginia a Tax-Friendly State? 

When you take a step back and consider the dynamics involved in tax collection in Virginia, it can be seen that there are lots of leniencies involved. The tax system of Virginia gives room for various deductions, which aims at ensuring its citizens are not in a difficult situation. Although it might not be free, it can be considered friendly especially when the person involved is a retiree. 

Is Virginia a High-Tax State? 

Virginia is not the state with the highest taxes on its residents. When compared with the 50 states in the US, it comes 13 from the bottom (38^th). After income tax deductions, its total tax (property tax, individual tax, sales tax/excise) is 7.93% of taxable income.

With the highest rate at 12.28 and the lowest at 5.16, Virginia may safely avoid the label of a “high tax state.”

Which States Have No Income Tax? 

The thought of having a state without a tax is quite appealing to the mind. However, states with no income tax do pay taxes; they just don’t pay them directly from their income. The state generates its revenue majorly from property and sales tax rather than a direct tax on income.

Thus states with no income tax include:

• Alaska
• Florida
• Nevada
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming
• New Hampshire

What Is the Most Tax-Friendly State? 

A number of factors must be taken into account in order to determine which state has the most favorable tax climate. No state or local income tax, low average sales and property taxes, and negligible or nonexistent local taxes are only a few of these advantages.

You might think Alaska is your best bet at first. Alaska would be higher on the list if not for the municipal sales tax of roughly 7.5%. Wyoming is the most tax-friendly state because it has no income tax, a low property tax of 3.81 percent, and a low sales tax of 2.66 percent.

Why Is Virginia a Good Place to Retire?

If you like being outside and need to stay busy, you might want to spend your time in the beautiful state of Virginia. Virginia has a lot of national parks, making it simple to get out into nature after work. The state also has a lot of fun things to do.

There are also miles and miles of hiking trails, mountains to climb, and a variety of high-end golf courses. If you’re into history, you could enjoy living in Virginia, thanks to all the historical sites there. Furthermore, the state provides numerous financial benefits that can assist you in maintaining your nest egg.

Virginia is tax-friendly for retirees. The state doesn’t tax the benefits of social insurance. And you’ll be able to deduct up to $12,000 in pension and alternative retirement financial gain from your state taxable financial gain if you’re a senior.

The state could be a sensible place for retirees and has numerous appetizing locations wherever you’ll be able to rest your laurels.

Conclusion

Virginia might not have the highest taxes, but it also doesn’t have the lowest. Not only is it tax-friendly for retirees, but it also lets you subtract a lot of things from your income before figuring out your tax. Virginia also has a lot of good places to live if you want to retire there.

Virginia Income Tax FAQs

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