Retirement Taxes in Virginia: Social Security, Pensions, RMDs and the Age Deduction

Virginia is a friendly place to retire, but not a tax-free one. Social Security is fully exempt from state tax, yet pensions, IRA and TSP withdrawals are taxable, and Virginia's age deduction shrinks quickly once your income rises. The federal rules changed too, with a new $6,000 senior deduction through 2028. This guide to retirement taxes in Virginia explains how each kind of retirement income is taxed, how to keep more of it, and how it all adds up for a retired couple in Spotsylvania.

How Social Security is taxed federally

Whether your benefits are taxed depends on your provisional income: your other income (including tax-exempt interest) plus half of your Social Security benefits.

The 85% figure is a ceiling, not a tax rate. At most 85% of your benefits are added to taxable income, and they're then taxed at your normal bracket. Because the thresholds have never been indexed for inflation, most retirees with a pension or meaningful IRA withdrawals end up near the 85% cap.

Virginia: Social Security exemption and the age deduction

Virginia subtracts every dollar of Social Security and Tier 1 Railroad Retirement that's taxable on your federal return. Pensions, annuities, and traditional IRA, 401(k) and TSP withdrawals are taxable. Roth withdrawals that are tax-free federally are tax-free in Virginia too.

Then comes the age deduction, which works by birth date:

• Born on or before January 1, 1939: $12,000 each, with no income test.
• Everyone else 65 or older (for 2026, born on or before January 1, 1962): up to $12,000 each, reduced $1 for every $1 of adjusted federal AGI (AFAGI) above $50,000 single or $75,000 married. AFAGI is federal AGI minus taxable Social Security.
• Married couples always use their combined AFAGI, even if they file separate Virginia returns. If both qualify, figure a joint deduction (up to $24,000) and split it in half.

Other Virginia basics for retirees: the standard deduction is $8,750 single or $17,500 joint for 2026 (rising to $9,200 / $18,400 for 2027), and each person gets a $930 exemption plus an extra $800 exemption at 65 or older. Virginia's top rate of 5.75% starts at just $17,000 of taxable income.

The federal $6,000 senior deduction (2025–2028)

The 2025 tax law added a deduction of $6,000 per person age 65 or older by the end of the year, for tax years 2025 through 2028. It's on top of the regular additional standard deduction for age ($1,650 per spouse on a joint return, or $2,050 if unmarried, for 2026), and you get it whether you itemize or not.

• Phase-out: reduced by 6% of modified AGI above $75,000 (single) or $150,000 (joint), so it disappears at $175,000 single and $250,000 joint (both spouses qualifying).
• Requirements: a valid Social Security number for each qualifying person, and a joint return if you're married.
• Virginia: no effect, because the deduction is taken after federal AGI.

Pensions, IRAs, RMDs and QCDs

Required minimum distributions

Delaying the first RMD to April 1 means two RMDs in the same year, which can push you into a higher bracket and shrink the age deduction. Later RMDs are due by December 31. If you're still working, you can usually delay RMDs from your current employer's plan (unless you own 5% or more of the business), but not from IRAs. Missing an RMD triggers a 25% excise tax on the shortfall, cut to 10% if you fix it within two years.

Qualified charitable distributions

Once you're 70½, you can have your IRA custodian send up to $111,000 in 2026 directly to qualifying charities. A QCD counts toward your RMD but is left out of your AGI. That's usually better than taking the RMD and deducting the gift, because most retirees take the standard deduction. A lower AGI can also cut how much Social Security is taxed, preserve the senior deduction and the Virginia age deduction, and lower Medicare premiums. QCDs must come from an IRA, not directly from a 401(k) or the TSP.

Withholding on retirement income

• Federal: pensions use Form W-4P. IRA and other one-time withdrawals use Form W-4R, with a default of 10% withheld unless you choose another rate. Eligible rollover distributions paid to you from a workplace plan have 20% withheld. You can also ask for federal withholding from Social Security on Form W-4V.
• Virginia: give your pension payer Form VA-4P before payments start. Without it, the payer must withhold Virginia tax as if you claimed zero exemptions. You can also elect no withholding or ask for an extra amount.

Roth conversions: the window before RMDs

The years between retiring and starting RMDs (and sometimes Social Security) are often the lowest-income years you'll have. Converting part of a traditional IRA or TSP balance to a Roth IRA in those years means paying tax now, at a 10% or 12% federal rate plus Virginia tax, on money that would otherwise be taxed later as RMDs, possibly at higher rates and with knock-on effects on Social Security taxation and Medicare premiums. A conversion is fully taxable in the year you do it, both federally and in Virginia, but there's no 10% early-withdrawal penalty on the conversion itself.

The trade-offs are real. Conversion income counts toward the Virginia age deduction phase-out, the senior deduction phase-out and the IRMAA lookback two years later. The sweet spot is usually "fill up the current bracket, but not past the next threshold." Converting in pieces over several years, and paying the tax from savings rather than from the converted amount, generally works best.

Common retirement tax mistakes

• Assuming Virginia doesn't tax pensions because it doesn't tax Social Security.
• Forgetting that a married couple's age deduction uses combined income, even when only one spouse has a pension.
• Taking the first RMD on April 1 of the following year without planning for two RMDs in one tax year.
• Writing a check to charity from an RMD instead of using a QCD after 70½.
• Leaving no withholding on IRA withdrawals and getting both an IRS and a Virginia underpayment penalty.

Worked example: a retired couple in Spotsylvania

Small timing choices like this, such as which account to draw from and when to convert to Roth, are where retirement tax planning pays for itself. Our year-end tax planning checklist lists the moves that must be finished by December 31.

Estimated taxes and Medicare IRMAA

Estimated taxes. New retirees are often surprised by a balance due, because a paycheck's automatic withholding is gone. If you expect to owe $1,000 or more federally after withholding, either increase withholding (withholding counts as if paid evenly through the year, even if it happens in December) or make quarterly payments. For 2026 the remaining due date is January 15, 2027 for both the IRS (Form 1040-ES) and Virginia (Form 760ES). Virginia requires estimates (or more withholding) if your 2026 Virginia tax after withholding and credits is expected to be more than $1,000.

IRMAA. Medicare Part B costs $202.90 a month in 2026. If your modified AGI (AGI plus tax-exempt interest) from two years earlier exceeds $109,000 single or $218,000 joint, you pay an income-related surcharge on Part B and Part D. 2026 premiums are based on 2024 tax returns. A one-time spike, such as a large Roth conversion or a home sale gain, can raise your premiums two years later. If your income dropped after a life-changing event like retirement, you can ask Social Security to use a more recent year.

Retirement tax checklist

• Collect Form SSA-1099, every 1099-R (including CSA 1099-R from OPM), and 1099-INT/DIV.
• File Form VA-4P with each pension payer, and review federal W-4P and W-4R elections each year.
• Calendar your RMD, and decide whether a QCD should cover part of it.
• Check whether a small change in withdrawals keeps you under the Virginia age deduction threshold, the senior deduction phase-out, or an IRMAA tier.
• Consider Roth conversions in low-income years before RMDs and Social Security start, keeping the IRMAA two-year lookback in mind.
• Keep records of nondeductible IRA contributions (Form 8606) and pension contributions so you don't pay tax twice.

Our tax planning service models withdrawals, conversions and QCDs across both the federal and Virginia returns before the year ends. Our office is in Fredericksburg and serves retirees in Spotsylvania County and across the region, and we also work with clients throughout Virginia and in other states remotely. If you're planning a move to Virginia in retirement, talk to us before you go: the first year as a part-year resident has its own rules.

Written by the Timeless Tax & Accounting teamTimeless Tax & Accounting was founded in 2020 by Nagham Alobaidi and serves clients across Virginia and in other states, in English and Arabic. Reviewed for accuracy against IRS and Virginia Tax guidance as of October 2, 2026.

This page is general information, not tax, legal or financial advice for your specific situation. Tax rules change often — talk with a professional before acting.