Clear Money Guide
What this state guide covers
A quick view of the questions, practical details and source notes below.
Updated August 12, 2026. Quick answer: Yes. Virginia taxes conversion income at its 2%-5.75% rates — the top rate starts at just $17,000 of taxable income — and there is no retirement subtraction for it: the Tax Commissioner ruled that conversion amounts includable in federal adjusted gross income “would be taxed on the taxpayer’s Virginia individual income tax return”. The $12,000 age-65 deduction is not limited by income type, but it shrinks dollar for dollar once adjusted federal AGI passes $50,000 single / $75,000 married, so the conversion usually erases it.
Confidence note: high. The Tax Commissioner’s ruling P.D. 98-44 addresses a Roth conversion directly and states that it is taxable; the age deduction’s phase-out is in the statute.
Why a conversion is a different question from a withdrawal
Almost every state summary answers “how does Virginia tax retirement income?” That is a question about distributions. A Roth conversion is not a distribution in the ordinary sense — it is a voluntary election to recognise income now in exchange for tax-free growth later. Whether a state’s retirement exclusion reaches that election is a separate question, and it is the one that decides your bill.
There is no retirement subtraction to argue about here. The $12,000 age deduction is the only thing that resembles one, and it is income-tested rather than income-type-tested — which means the conversion is the income that takes it away. Only taxpayers born on or before January 1, 1939 keep it regardless.
Because the state cost is certain, and the top rate starts at just $17,000 of taxable income, the lever that matters in Virginia is when and how much — and a converter over 65 should count the lost age deduction as part of the price of a large conversion.
What Virginia does with the converted amount
State income tax: graduated, 2% to 5.75% top rate (top bracket starts at $17,000)
How Virginia treats IRA and plan income: Pensions, 401(k) and IRA withdrawals taxable. Age Deduction: born on or before Jan 1, 1939 – full $12,000; age 65+ born after Jan 1, 1939 – $12,000 reduced $1-for-$1 by adjusted FAGI (excl. taxable SS) over $50,000 single / $75,000 married combined (single deduction gone at $62,000).
Virginia’s top rate starts at $17,000 of taxable income.
That means almost any conversion is taxed at 5.75%, and the Tax Commissioner has ruled that conversion amounts in federal adjusted gross income are taxable in Virginia. The $12,000 age deduction then shrinks dollar for dollar once adjusted federal AGI passes $50,000 single or $75,000 married, so a conversion usually erases it. Both effects are worth pricing at the same time.
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What to ask a preparer about Virginia
None on eligibility — the Tax Commissioner has ruled it taxable. Ask instead how much of my age-65 deduction this conversion phases out, and whether splitting it across two tax years helps.
Converting around a move
Converting in the year you move into Virginia is the case that catches people. Residency at the moment of conversion is what generally determines which state gets to tax it, so a conversion executed a week before a move and one executed a week after can produce different bills.
Four separate taxes change when you move, not one: income tax on withdrawals, treatment of Social Security, estate tax, and inheritance tax. A state that looks good on conversions can be worse on the other three.
The state bill is the smaller half
Whatever Virginia does, the conversion is federal ordinary income first. The federal bracket you land in, and whether the conversion pushes you over an IRMAA threshold two years later, will usually move more money than the state line does. The state answer tells you whether to convert here; the federal answer tells you how much to convert at once.
Paying the tax from outside the account matters more than either. Using converted dollars to pay the bill shrinks the balance that was the entire point of converting.
Sources
Authority: Va. Code § 58.1-322.03 (age deduction and SS subtraction); Va. Code § 58.1-322.02(24) (military benefits subtraction); Virginia Tax: Subtractions page and Military Benefits FAQ.
Compiled from state statutes, session laws and revenue-department publications and adversarially verified in July 2026. Dataset confidence for Virginia: high.
This page states what the cited authority says. It is not tax advice, and a conversion large enough to matter is worth putting in front of a preparer who can see your whole return.
Nearby states
Where there is no subtraction for conversion income, the state bill is the rate applied to the whole amount — the useful comparison is with the federal bill sitting next to it. The Roth conversion state tax calculator shows both, and what share of the total each one is.