Moving to Virginia

Virginia taxes residents on everything, nonresidents on Virginia-source income, and people who move during the year on the income of the part they lived here. A resident is anyone domiciled in Virginia, or anyone who kept a place to live in Virginia for more than 183 days of the year, whether or not those days were consecutive. The year you move you file Form 760PY, report the income received while a resident, and prorate the standard deduction and the $930 exemptions by the portion of the year you lived here. Income from the old state before the move is left off, and the tax the old state charged on it earns no Virginia credit, since Virginia never taxed that income. For people who live in one state and work in another, Virginia has wage-only reciprocity with the District of Columbia, Kentucky, Maryland, Pennsylvania and West Virginia, and a credit on Schedule OSC for income tax paid to any other state. There is no convenience-of-the-employer rule in Virginia, and no local income tax to sort out when you cross a county line.

The Department of Taxation, which calls itself Virginia Tax, uses the same phrase every state does: a change of domicile requires abandoning the old home and establishing the new one, with physical presence and the intent to remain. Buying a house and getting a Virginia driver’s license show intent; they do not start Virginia residency while you are still living and working somewhere else. A 2026 ruling of the Tax Commissioner, P.D. 26-3, held exactly that for a taxpayer who bought in August, got her license in August, and moved in October. Her Virginia year started in October.

Three kinds of filers

The Department allows two shortcuts. A part-year resident whose entire federal AGI is from Virginia sources may file Form 760 as a full-year resident and take the full standard deduction and exemptions instead of prorating. Someone who lived in Virginia 183 days or fewer may file Form 763 as a nonresident, which also allows full amounts.

The 183-day test is a test of “actual residence,” and it bites people who never meant to become Virginians: a consultant who rents an Arlington apartment for a long federal contract, a retiree who spends seven months a year at a house on the Northern Neck, a graduate student who keeps a lease over the summer. If you maintained a place of abode in Virginia and were here more than 183 days, Virginia treats you as a resident for the year even though your domicile is elsewhere, and the other state will likely treat you as a resident too. Each state then gives a credit for the other’s tax, imperfectly. The cure is to keep the Virginia stays under the line, or to accept that Virginia is home.

The year you move: Form 760PY

A part-year resident reports on Form 760PY the income received during the Virginia period, allocated by when it was received, not when it was earned. Wages are split by pay date; a bonus paid in March for last year’s work belongs to wherever you lived in March. Interest, dividends and capital gains go with the date of the payment or sale. A pension is split by payment. Income from the non-Virginia period is subtracted on the part-year schedule so that only the Virginia-period income is taxed, and the Department expects a schedule showing the allocation; a 760PY filed without one, as in P.D. 26-3, gets sent back.

The standard deduction and the exemptions are prorated by the fraction of the year you were a resident, using the worksheet in the Form 760PY instructions. Virginia’s own deductions on the part-year Schedule ADJ, such as Virginia529 contributions and child care, are limited to amounts paid while a resident. The brackets themselves are not prorated, so a mover whose Virginia-period income is high enough reaches the 5.75% rate just as a full-year resident would. Married couples who moved on different dates each use their own dates in separate columns.

The rule that surprises movers is the one about the credit. A Virginia resident who pays tax to another state on income Virginia also taxes gets a credit on Schedule OSC. A part-year resident does not get that credit for the months before the move, because Virginia did not tax that income in the first place; the old state taxed it, Virginia left it out, and there is no double tax to relieve. The credit is available only for other-state tax on income received during the Virginia period, say a final commission from the old employer that arrived after the move and was taxed by the old state as nonresident income. Software that carries the old state’s full-year tax onto Schedule OSC is wrong, and the Department catches it.

Reciprocity: five neighbors, wages only

Virginia has reciprocal agreements with the District of Columbia, Kentucky, Maryland, Pennsylvania and West Virginia. Under each, a person who lives in one jurisdiction and earns wages or salary in the other pays income tax only to the home jurisdiction, and files no return in the other. The terms differ.

Reciprocity never covers business income, rent, or the sale of property. A Maryland resident with a consulting practice in Virginia files Form 763 on the business income; a Virginian with a rental in Bethesda files a Maryland nonresident return.

The paperwork is Form VA-4. A Maryland, Pennsylvania, West Virginia, Kentucky or DC resident working for a Virginia employer gives the employer a VA-4 certifying the exemption so no Virginia tax is withheld, and must re-certify every year. A Virginia resident working in one of those places asks the employer there to stop withholding and, if the employer will not withhold Virginia tax instead, makes Virginia estimated payments. When Virginia tax was withheld from a nonresident in error, Form 763-S recovers it; when DC tax was withheld from a Virginian, DC Form D-40B does the same, and the Virginia return gives no credit for DC tax that reciprocity says should never have been paid.

The Maryland, Pennsylvania and West Virginia agreements have a trap in the 183-day condition. A Pennsylvania resident who takes a Northern Virginia apartment for the work week has an abode in Virginia and loses the exemption, and at more than 183 days becomes an actual resident of Virginia besides. The agreements were written for commuters, not for people with two homes.

Everyone else: the credit on Schedule OSC

A Virginia resident who earns income in a state without a reciprocal agreement, North Carolina, Tennessee, New York, anywhere, reports it on Form 760 as a resident and takes a credit on Schedule OSC for the income tax paid to the other state on income Virginia also taxes. The credit covers earned income, business income and gains on capital assets not used in a business, and is limited to the lesser of the other state’s tax on that income or Virginia’s tax on it. One Schedule OSC per state, with a copy of the other state’s return attached; a W-2 showing withholding is not enough, since withholding is not the tax. Tennessee and the other no-income-tax states generate no credit because there is nothing to credit.

Two wrinkles. For Kentucky, Maryland, North Carolina and West Virginia there is a special border-state computation when the other state taxed only wages or Schedule C income and Virginia taxable income is at least as large as the income the other state taxed; it tends to allow the full other-state tax. And four jurisdictions, Arizona, California, Oregon and the District of Columbia, are “reverse credit” states: a Virginia resident who works in California takes no Virginia credit and instead claims a credit for Virginia tax on the California nonresident return. Residents of those four who have Virginia-source income do the opposite, claiming a credit on Form 763 for tax paid to their home state.

Remote work across the line

Virginia sources wages to where the work is physically performed and has no convenience-of-the-employer rule. A North Carolina resident who works from home in Raleigh for a Richmond company owes Virginia nothing on those wages, and Virginia tax should not be withheld; days actually worked in the Richmond office are Virginia-source and taxed on Form 763 (verify). A Virginia resident who works from home in Roanoke for a Charlotte company owes Virginia on everything, as a resident, and North Carolina nothing on the days worked in Virginia. The difficult case is the Virginian who works remotely for an employer in a state with a convenience rule, such as New York, which taxes the wages anyway; Virginia’s credit page does not exclude that tax from Schedule OSC, but confirm with the Department before relying on the credit (verify).

Military families

Under the Servicemembers Civil Relief Act, a service member stationed in Virginia who is domiciled elsewhere is not a Virginia resident and does not pay Virginia tax on military pay, however long the assignment. The spouse may elect to use the service member’s domicile for state tax, so a couple from Texas stationed at Norfolk can both stay Texas taxpayers even if the spouse works in Virginia; the spouse gives the employer a VA-4 claiming the exemption. The reverse also holds: a Virginia-domiciled service member stationed in Germany or Georgia remains a Virginia resident, files Form 760, and subtracts up to $15,000 of basic pay, with the subtraction phasing out between $15,000 and $30,000 of basic pay. Virginia-source income other than military pay, a rental house in Virginia Beach for example, is taxed regardless of domicile. Military retirement after leaving the service is taxed by the state of residence at the time, with Virginia’s $40,000 subtraction if that state is Virginia.

Leaving Virginia

Moving out works in mirror image. Form 760PY for the year of the move, income allocated by date received, deductions prorated. After the move, Virginia may tax only Virginia-source income: a Virginia rental, a Virginia business, the sale of Virginia real estate. Federal law bars any state from taxing the retirement income of a former resident, so a Virginia pension paid to someone now living in Florida is Florida’s to tax, and Florida does not. The gain on the sale of a Virginia home that qualifies for the federal exclusion is excluded federally and therefore never reaches Virginia AGI, whether the seller still lives here or not.

If the Virginia house is kept, the license renewed, the cars registered here and the family still here, the Department will say the domicile never changed, and the 183-day test is waiting behind it. The people who are audited are the ones who moved on paper.

The year you move: a checklist

• Write down the moving date and keep the evidence: lease or closing, movers’ invoice, the day the utilities switched.
• Get the Virginia driver’s license, register the cars and register to vote; the Department reads all three as intent. Expect a personal property tax bill on the cars from your new county or city.
• File a new Form VA-4 with your employer so Virginia withholding starts on the right date, and stop the old state’s withholding the same day.
• If you are self-employed or retired on a pension, start Virginia estimated payments; the threshold is $1,000 of expected tax and the first installment is due May 1.
• Keep pay stubs around the move date, since wages are split by pay date, and note the dates of any bonus, stock vesting or sale.
• Open or re-register 529 accounts in your own name if you want the $4,000 Virginia529 deduction; out-of-state plans do not qualify.
• If you are 65, your age deduction and $800 exemption are prorated in the move year like everything else.
• File Form 760PY for the move year and a part-year return in the old state; do not claim a Virginia credit for the old state’s tax on pre-move income.