Virginia Military Benefits Subtraction

Virginia lets a resident subtract military retirement income, Survivor Benefit Plan payments to a surviving spouse, and other military benefits paid to a surviving spouse, when that money was included in federal adjusted gross income. The Department of Taxation caps the subtraction at $40,000 for tax year 2025 and later returns. Tax year 2024 was capped at $30,000. There is no age test for the years that use those caps. VA disability compensation is not part of this subtraction. Federal law already keeps it out of federal income, and Virginia does not tax it a second time. Qualified military benefits that never entered federal income cannot be subtracted again. Concurrent Retirement and Disability Pay is different: the retired-pay portion is in federal income, so it can be subtracted up to the cap. Combat-related special compensation that was excluded federally is not subtracted again. The same dollars cannot be used in two subtractions. A Medal of Honor recipient has a separate, uncapped subtraction for military retirement income. This entry does not restate that rule. A disabled veteran who has no taxable military retirement, and only VA compensation, has nothing to subtract here. The compensation is already excluded.