If federal employees are excluded from paying taxes in Virginia, that is one of the main queries that taxpayers have. Yes, however there are some exceptions, is the answer. In this post, we’ll examine the specifics of Virginia’s state income tax and clarify the regulations governing tax exemptions for employees of the federal government. What is the state income tax in Virginia?
One of the 41 US states that levies a state income tax on its citizens is Virginia. Depending on the individual’s earning level, the state income tax rate varies. The tax rate ranges from 2% to 5.75%, with people making more than $17,000 per year subject to the highest tax rate. The Virginia state income tax is collected to pay for a variety of public services, such as infrastructure improvement, healthcare, and education. Employees of the federal government are exempt from Virginia taxes, correct?
Federal employees are tax exempt in Virginia, however there are some notable exceptions. Federal government employees stationed in Virginia are free from paying state income tax, according to the Virginia Department of Taxation. As long as they are serving in the state as active duty personnel, this covers both civilian employees and military personnel. However, if you work for the government and live in Virginia, you still have to pay state income tax on any money you make outside of the state. Additionally, you will be required to pay state income tax on any non-federal income you receive while stationed in Virginia.
It’s vital to remember that the tax exemption only covers earnings made while working for the federal government. The state income tax of Virginia will be applied to all additional income, including income from self-employment and part-time employment. What About Retired Federal Employees? Virginians who are retired from the federal government are also subject to state income tax. Even though they might not be getting a federal salary any more, they are still regarded as Virginia residents and are obligated to pay state income tax on all sources of income. Final Thoughts:
The Virginia state income tax is a vital source of funding for the state’s many public services. However, as long as they are stationed in Virginia on active service, federal personnel are free from paying state income tax. Virginian residents who have retired from the federal government are nevertheless liable for state income taxes. Understanding Virginia’s state income tax regulations can enable you to make the appropriate financial plans and stay out of trouble legally and financially.