Updated October 4, 2026. Quick answer: Yes, with an age deduction. Virginia’s return works from federal adjusted gross income (the instructions list “Additions to Federal Adjusted Gross Income (FAGI)”), so 401(k) and IRA withdrawals are taxed. The Form 760 instructions let a filer born on or before January 1, 1961 “claim an age deduction of up to $12,000 each for 2025”, reduced above $50,000 of income (single) or $75,000 (married).
State retirement-income forms, line by line: Virginia age deduction.
Inherited an IRA? What the state’s own documents say about taxing those withdrawals: Virginia tax on inherited IRA withdrawals.
Hold a 403(b) or 457(b)? What the state’s own documents say about taxing those withdrawals: does Virginia tax 403(b) and 457(b) withdrawals.
Withdrawing from an IRA or 401(k)? Whether the state withholds tax from it, from its own documents: Virginia tax withholding on IRA and 401(k) withdrawals.
Taking money out of your TSP? How the state taxes it, from its own tax documents: Does Virginia tax TSP withdrawals?.
Inheriting from, or planning for, someone in this state? Whether the state has an inheritance tax, from its own tax documents: Does Virginia have an inheritance tax?.
What Virginia does with 401(k) and IRA withdrawals
The deduction is not limited to retirement income. It applies to a qualifying filer’s income as a whole, and a larger income reduces it.
| Item | What the documents say |
|---|---|
| Treatment | Taxable, with an age deduction that applies to income generally |
| Deduction | Up to $12,000 each for 2025 if born on or before January 1, 1961; reduced $1 for each $1 of income over $50,000 single or $75,000 married |
| State rates | 2% on the first $3,000, rising to a top rate of 5.75% on income over $17,000 |
| Source | Virginia Department of Taxation, 2025 Form 760 instructions |
A $40,000 withdrawal
For a single filer under the $50,000 income level, the age deduction takes up to $12,000 off a $40,000 withdrawal, leaving $28,000 (computed as $40,000 minus $12,000) in income before the standard deduction. The tax then follows the graduated schedule; the instructions state “5.75% for income over $17,000”.
Conditions that decide the answer
- Born on or before January 1, 1939: the full $12,000 age deduction.
- Born January 2, 1939 through January 1, 1961: the deduction is based on income. A single filer’s $12,000 is reduced $1 for every $1 of AFAGI over $50,000.
- AFAGI is federal adjusted gross income, modified for conformity adjustments and reduced by taxable Social Security and Tier 1 Railroad benefits.
Single-filer rate schedule
| Rate | 2025 taxable income |
|---|---|
| 2% | First $3,000 |
| 3% | $3,000 to $5,000 |
| 5% | $5,000 to $17,000 |
| 5.75% | Over $17,000 |
What changes in 2026
The 2025 instructions print no 2026 schedule, so none is stated here.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on these withdrawals in Publication 590-B, Distributions from Individual Retirement Arrangements and Publication 575, Pension and Annuity Income.
Related: whether Virginia taxes pensions, how Virginia taxes retirement income, whether Virginia taxes Roth conversions, and the state-by-state table of 401(k) and IRA withdrawal tax.
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Answer againSources
- 2025 Form 760 Resident Individual Income Tax Instructions: https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2025-760-instructions.pdf
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.