RICHMOND, Va. (WRIC) — Virginia is cutting taxes for veterans as promised by Governor Glenn Youngkin but several states go further to provide relief.
Governor Youngkin said he wants to build on the state’s progress moving forward but, at least for now, he has not specifically committed to proposing a total tax exemption for military retirement pay.
Youngkin ceremonially signed two bills on Friday that passed earlier this year, marking a bipartisan victory that many described as long overdue.
“For so long, Virginia has not always recognized the veterans,” said Denice Williams, who chairs the Joint Leadership Council of Veterans Service Organizations. “This money will help realize and help compensate for some of those sacrifices that we made. It’s not going to make me a millionaire but it’s certainly going to help.”
Under the new law, starting in 2022, Virginia is making up to $10,000 in military retirement pay tax-free for those ages 55 and older. The state income-tax deduction will increase by $10,000 each year until 2025, when up to $40,000 will be exempt.
Jared Walczak, Vice President of State Projects at the Tax Foundation, said veterans can expect to save somewhere between $2,042 and $2,300 annually when the maximum exemption takes effect in 2025.
Youngkin said Virginia was previously one of just three states that were fully taxing these retirement benefits, causing many veterans to move away.
“We will pick up that sign that says, ‘Welcome to North Carolina, the most military-friendly state in America’ and we will turn that sign around and we will plant it in the other direction. That’s our commitment to you,” Youngkin told a crowd of veterans on Friday morning in Stafford.
But several states still provide more income tax relief for veterans.
According to a state-by-state breakdown compiled by AARP in 2020, military retirement pay is not taxed in at least 30 states, either because it’s exempt or because there is no individual income tax there. A number of other states offer partial exemptions similar to Virginia’s new law.
Bill Ashton, a U.S. Navy veteran who formerly served as JLC chairman, views this as a first step.
“We’re not going to stop and hopefully, within the next four years, we will be able to totally tax-exempt military retirement,” Ashton said.
Speaking to reporters briefly after the bill signing, Youngkin didn’t specifically commit to a total exemption but he said Virginia must do more to “be the best.”
“We’re going to continue to work this and I’m sure hoping that we can see progress on bringing down the age threshold and expanding the overall benefit to our veterans,” Youngkin said. “In December, when I present my budget amendments, you’ll have full visibility on everything we’re doing.”
The tax relief lawmakers settled on this year represents a compromise between the Republican-led House of Delegates and the Democrat-controlled state Senate.
Delegate Luke Torian, who chaired the House Appropriations Committee before Democrats lost power in the chamber, said he’s open to a total exemption.
“I have no objections to that. This is just the first step in the process,” Torian said.