Updated September 4, 2026. Quick answer: Yes, for public, private and federal pensions alike: Virginia taxes retirement-plan income the same way it taxes wages, with no source-based carve-out. The one broad exception is military retirement pay, partially exempt up to $40,000 for tax year 2025 and later. A general age-65 deduction of up to $12,000 (phased out above $50,000/$75,000 of income) applies against any Virginia income, retirement or not.
Confidence note: high. This page is scoped to pension, IRA and 401(k) taxation specifically. For the state’s full retirement-tax picture (Social Security, tax rates, estate and probate), see how Virginia taxes retirement income generally.
Pending, not current law: House Bill 137 (2026 session) would raise the military subtraction cap to $60,000 (2028), $80,000 (2029), then uncap it (2030); enactment could not be confirmed this session (JS-rendered bill tracker), so treat $40,000 as the current-law figure.
How pensions and retirement-account withdrawals are taxed
| Public (state/local government) pensions | Fully taxable as ordinary income: no exemption for state or local government pensions. |
|---|---|
| Private (employer) pensions | Fully taxable as ordinary income, identical treatment to public pensions. |
| Federal government pensions (FERS/CSRS) | Fully taxable, same as state/local pensions. Virginia has specifically litigated and rejected a Davis v. Michigan-style discrimination claim from federal CSRS retirees (Beisel v. Va. Dept. of Taxation, dismissed with prejudice, appeal declined). |
| Military retirement pay | Partially exempt: the Military Benefits Subtraction covers up to $40,000 of eligible military retirement benefits for tax year 2025 and later. |
| IRA and 401(k)/403(b) distributions | Traditional IRA, 401(k) and 403(b) distributions are fully taxable, the same as any other income. Roth IRA distributions are generally not taxed, following federal treatment. |
| General retirement-income exclusion | Age Deduction: $12,000 for taxpayers 65 or older, reduced $1 for every $1 that federal AGI exceeds $50,000 (single) or $75,000 (married); there is no separate reduced tier for ages 62 to 64 in current law. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of a pension or IRA withdrawal to take this year, whether a Roth conversion makes sense before or after a move, and how state tax interacts with the rest of your plan, but that does not replace the numbers in your own return.
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Social Security
Social Security is never taxed by Virginia. Social Security has its own rules in every state; see the full breakdown in how Virginia taxes retirement income generally.
Statute and sources
Governing citation: Va. Code sec. 58.1-322.02 (subtractions, incl. Military Benefits Subtraction), sec. 58.1-322.03(5) (Age Deduction).
- Virginia Tax, Virginia Taxes and Your Retirement
- Virginia Tax, Military Benefits Subtraction FAQ
- Va. Code sec. 58.1-322.02
- Va. Code sec. 58.1-322.03
Read September 4, 2026.
Related: how Virginia taxes retirement income generally · does Virginia tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.