Updated October 7, 2026. Quick answer: Only if you live there. Virginia residents report pension income from any state, while the nonresident instructions exclude “or pension payments from a Virginia payor.” from the Virginia-source income that triggers a nonresident return.
How Virginia treats a pension earned elsewhere
| Item | What the state documents say |
|---|---|
| Nonresidents | A nonresident files Form 763 only when income comes from Virginia sources, which the instructions define as labor performed, business done, or property located in Virginia. The Form 760 instructions list pension payments from a Virginia payor among the items that do not trigger a nonresident filing. The source says: “labor performed, business done, or property located in Virginia”. This rests on the nonresident sections of the 2025 Form 760PY and Form 760 instructions. |
| Residents with a pension earned elsewhere | Virginia taxable income of a resident is federal adjusted gross income with the state modifications, so a pension earned in another state is part of the starting figure. The resident instructions allow an age deduction of up to $12,000 each for taxpayers born on or before January 1, 1961, reduced $1 for every $1 of adjusted federal adjusted gross income above $50,000 for single filers or $75,000 for married filers. The source says: “an age deduction of up to $12,000 each for 2025”. The resident rule rests on Va. Code 58.1-322 and the 2025 Form 760 instructions. |
| Part-year residents (year of a move) | A part-year resident generally files Form 760PY. Taxable pensions are entered in total in Column 1, and the portion attributable to the period of residence in Virginia is entered in Column 2, with the exemption prorated. Income received as a nonresident from Virginia sources is reported separately on Form 763. The source says: “income attributable to residence outside Virginia”. This rests on the 2025 Form 760PY instructions. |
| Rate | Virginia prints a graduated schedule for 2025 that runs from 2% up to $3,000 to 5.75% for income over $17,000, with 3% from $3,001 to $5,000 and 5% from $5,001 to $17,000. The source says: “and 5.75% for income over $17,000”. The statute prints the same bracket structure. |
| Return to file | Residents file Form 760, part-year residents file Form 760PY, and nonresidents with Virginia-source income file Form 763. The source says: “File Form 760PY, Part-Year Resident Return, if:”. |
A $40,000 move-year example
A retiree receives $40,000 of pension in the year of a move: $20,000 before the move date, as a Virginia resident, and $20,000 after leaving.
The first $20,000 can be taxed by Virginia; the rest is outside its reach under the federal rule below. Taxed wholly at the lowest printed rate, 2%, the tax on it is computed as $20,000 x 0.02 = $400; taxed wholly at the highest, 5.75%, it is computed as $20,000 x 0.0575 = $1,150. The real figure falls between these bounds before any exclusion or credit. Federal tax still applies.
The federal rule that protects a nonresident
4 U.S.C. 114(a) bars a state income tax on retirement income of an individual “who is not a resident or domiciliary of such State”. Retirement income means certain plan payments made as a “series of substantially equal periodic payments”, so not every payment is covered.
Related: how Virginia taxes retirement income, whether Virginia taxes pensions, Virginia to Arizona retirement taxes, Virginia to Delaware retirement taxes, out-of-state pension tax by state, and deferred compensation lump sums after a move.
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Answer againSources
- 2025 Form 760 Resident Individual Income Tax Instructions (Virginia Department of Taxation): https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2025-760-instructions.pdf
- 2025 Form 760PY Part-Year Resident Individual Income Tax Instructions (Virginia Department of Taxation): https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2025-760py-instructions.pdf
- Va. Code 58.1-322 Virginia taxable income of residents (Virginia Law): https://law.lis.virginia.gov/vacode/title58.1/chapter3/section58.1-322/
- Va. Code 58.1-320 Imposition of tax (Virginia Law): https://law.lis.virginia.gov/vacode/title58.1/chapter3/section58.1-320/
- 4 U.S.C. 114, Limitation on State income taxation of certain pension income (U.S. Government Publishing Office, 2023 edition): https://www.govinfo.gov/content/pkg/USCODE-2023-title4/html/USCODE-2023-title4-chap4-sec114.htm
Sources: the primary documents linked above, read on October 7, 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.