Updated October 7, 2026. Quick answer: Yes, generally. Virginia starts from federal adjusted gross income, and the Tax Commissioner’s ruling 24-133 applied that to a TSP distribution: “the retirement account at issue was a thrift savings plan (TSP)”. Virginia’s top rate is “5.75% for income over $17,000”, and the age deduction of up to $12,000 each is separate.
Project a Thrift Savings Plan balance with the FERS agency match and the 2026 limits: TSP calculator.
Virginia TSP withdrawal tax treatment at a glance
| Item | What the documents say |
|---|---|
| TSP withdrawals | Taxed: a TSP distribution is in Virginia income unless a listed subtraction applies |
| FERS annuity | The documents read name no FERS-specific exemption |
| Rate or limit printed | 5.75% for income over $17,000; age deduction up to $12,000 each (2025) |
| Where it is reported | Form 760, line 4 (age deduction); Schedule ADJ, code 31 |
| Source | Virginia Department of Taxation |
What the Virginia documents say
Ruling 24-133, issued on December 13, 2024 for tax year 2023, is titled as a ruling on subtractions for retirement income and a thrift savings plan. It works through the computation of Virginia taxable income with federal adjusted gross income as the start, and notes that “the retirement account at issue was a thrift savings plan (TSP)”. The taxpayer in the ruling had made contributions that were deductible for federal purposes and taxed by another state, and the Department allowed a subtraction for part of the distribution on that basis.
The 2025 Form 760 instructions name the same subtraction as “Retirement Plan Income Previously Taxed by Another State”, limited to the amount of the contributions previously taxed. Separately, the instructions say that taxpayers born on or before January 1, 1961 may claim “an age deduction of up to $12,000 each for 2025”, depending on birth date, filing status and income.
A worked example at $30,000 of withdrawals
An illustration, not a return: a Virginia resident takes $30,000 from the TSP in 2026 and it is in federal adjusted gross income, so it starts in Virginia income. If the full $12,000 age deduction applied to this person, the most it could reduce Virginia income is $12,000, leaving $18,000 of this withdrawal in income; the deduction depends on birth date, filing status and income and also covers other income. Virginia’s top rate is 5.75% for income over $17,000, and this page does not compute the bracket tax.
If you moved to Virginia or left it
The rules above are Virginia’s own, for a resident. Federal law limits what a state you have left may do: “No State may impose an income tax on any retirement income” of someone who is not a resident or domiciliary of that state, as 4 U.S.C. 114(a) puts it. The statute defines retirement income by reference to plans described in the Internal Revenue Code; this page does not decide whether a particular TSP payment meets that definition. If you moved during the year, check each state’s page and return. See CMG’s TSP withdrawal options and FERS, TSP and Social Security sequencing pages for the federal side.
What changes in 2026
The documents read for Virginia announce no change for 2026 that is specific to TSP withdrawals. The instructions read are for tax year 2025, the newest archived; check the state agency for the 2026 forms when they are published.
What the documents do not say
- Ruling 24-133 is addressed to one taxpayer for tax year 2023 and is not a rule for everyone; it is the Department’s published reading of how a TSP distribution flows through the computation. The documents read name no FERS-specific exemption. The instructions are for tax year 2025.
Common mistakes
- Claiming the previously-taxed-by-another-state subtraction when no other state taxed the contributions; the subtraction is limited to contributions that were taxed there and deducted federally.
- Treating the age deduction as a shield for the whole withdrawal; it is capped at $12,000 each and phases down by birth date and income.
- Assuming the answer for one state applies to another, or that the state answer changes the federal tax on the withdrawal.
Related: TSP withdrawal options, state tax on TSP withdrawals, Virginia retirement taxes, how Virginia taxes pensions, and how Virginia taxes 401(k) and IRA withdrawals.
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Answer againSources
- Tax Commissioner ruling 24-133 (Subtractions: Retirement Income: Thrift Savings Plan): https://www.tax.virginia.gov/laws-rules-decisions/rulings-tax-commissioner/24-133
- 2025 Form 760 Resident Individual Income Tax Instructions: https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2025-760-instructions.pdf
- Military Benefits Subtraction FAQ: https://www.tax.virginia.gov/military-benefits-faq
- 4 U.S.C. 114, Limitation on State income taxation of certain pension income (U.S. Code, GovInfo): 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 tax professional or the state agency itself is the right place to confirm anything consequential.