Start For Free

Fast, Secure, and Always Accurate!

Back to List

Category: Virginia

Virginia Subtractions from Income

Interest on US Government Obligations

Enter the amount of any income (interest, dividends and gain) from obligations of the U.S. that are included in your federal adjusted gross income, but are exempt from Virginia state tax.

 

Disability Income Exclusion

Enter the amount of disability income reported as wages (or payments in lieu of wages) on your federal return for permanent and total disability. On joint returns, each taxpayer may claim, if applicable, an age deduction or a subtraction for disability income. Individuals can subtract up to $20,000 of disability income as defined under Internal Revenue Code Section § 22(c)(2)(b)(iii).

 

Note: A taxpayer may not claim an age deduction on Form 760 and a subtraction for disability income. Claim the one that benefits the taxpayer the most. For married taxpayers filing a joint return, each taxpayer may claim if applicable, an age deduction or a subtraction for disability income.



Fixed Date Conformity Adjustment for Special Depreciation

 

Bonus Depreciation: If you claimed a federal depreciation deduction and one or more of the depreciable assets received the special 30% or 50% bonus depreciation deduction under IRC § 168(k) in any taxable year from 2001 through 2016, or the bonus depreciation under IRC §§ 168(l), 168(m), 1400L, or 1400N, then depreciation must be recomputed for Virginia purposes as if such assets did not receive such bonus depreciation. If your total 2016 Virginia depreciation calculation is more than your 2016 federal depreciation calculation, then the difference must be recognized as a subtraction. Enter the amount that should be subtracted from Federal Adjusted Gross Income based upon the recomputation of allowable depreciation. 

 

Other Fixed Date Conformity Subtractions: If you are required to make any Other Fixed Date Conformity subtractions, enter the total amount of such subtractions. Also, enclose a schedule and explanation of such subtractions.

 

 


The following entries show as Other Subtractions from Income on your Virginia return. Please note the Code number of the item, as this will appear on your VA 760-CG under Subtractions in Part 1.

Income from Virginia Obligations- Code 20

Enter the amount of income from Virginia obligations that you included in your federal adjusted gross income. Income from Virginia obligations would include interest on Virginia state bonds or municipal obligations and gains from sales of those obligations that are included in your federal adjusted gross income.

Federal Work Opportunity Tax Credit Wages –Code 21
Enter the amount of wages or salaries eligible for the federal Work Opportunity Tax Credit that you included in your federal adjusted gross income. Do not enter the federal credit amount.

 

Tier 2 and Other Railroad Retirement and Railroad Unemployment Benefits Code 22
Enter the amount of Tier 2 vested dual benefits and other Railroad Retirement Act benefits and Railroad Unemployment Insurance Act benefits included in federal adjusted gross income and reported on your federal return as a taxable pension or annuity.

 

Virginia Lottery Prizes – Code 24
Enter the sum of all prizes under $600 awarded to you by the Virginia Lottery Department to the extent that you included them in your federal adjusted gross income.

 

Virginia National Guard Income –Code 28
Enter the amount of wages or salaries for active and inactive service in the National Guard of the Commonwealth of Virginia for persons of rank O3 and below included in federal adjusted gross income. This amount may not exceed the amount of income received for 39 days or $3,000, whichever is less. Reminder: This subtraction does not apply to members of the active or reserve units of the Army, Navy, Air Force or Marines, or the National Guard of other states or the District of Columbia. If you claim this subtraction, you cannot claim a credit for Low Income Individuals or Virginia Earned Income Credit.

 

Military Pay and Allowances Attributable to Active Duty Service in a Combat Zone or a Qualified Hazardous Duty Area –Code 30
To the extent included in federal adjusted gross income and not otherwise subtracted, deducted or exempted, enter military pay and allowances earned while serving by the order of the President of the United States with the consent of Congress in a combat zone or qualified hazardous duty area treated as a combat zone for federal tax purposes pursuant to IRC § 112.


Retirement Plan Income Previously Taxed by Another State –Code 31
Enter the amount of retirement income received during the taxable year on which the contributions were taxed in another state, but were deductible from federal adjusted gross income during the same period. The total amount of this subtraction cannot exceed the amount of the contributions previously taxed by another state, usually in a previous year.

 

Virginia College Savings Plan Income Distribution or Refund –Code 34
Enter the amount of any income included in federal adjusted gross income that is attributable to a distribution of benefits or a refund from the Virginia College Savings Plan (previously called the Virginia Higher Education Tuition Trust Fund), in the event of a beneficiary’s death, disability or receipt of scholarship.

 

Unemployment Compensation Benefits - Code 37

Enter the amount of unemployment compensation benefits received during the taxable year reported as income on your federal income tax return.

 

Basic Military Pay –Code 38
Military service personnel may subtract up to $15,000 of military basic pay received during the taxable year, provided they are on extended active duty for a period in excess of 90 consecutive days. Military personnel stationed inside or outside Virginia are eligible. This subtraction is allowed for military basic pay that is included in federal adjusted gross income and is not included in another subtraction, such as the Virginia National Guard Income Subtraction. If the military basic pay does not exceed $15,000, then the entire amount may be subtracted. If the basic military pay is over $15,000, then the subtraction is reduced by the amount exceeding $15,000. For every $1.00 of income over $15,000, the maximum subtraction is reduced by $1.00. If your basic military pay is $30,000 or more, you are not entitled to a subtraction. On joint returns, each spouse can qualify for the subtraction. If you claim this subtraction, you cannot claim a Credit for Low-Income Individuals or Virginia Earned Income Credit.


Federal and State Employees - Code 39
Any individual who qualifies as a federal or state employee earning $15,000 or less in annual salary from all employment can subtract up to $15,000 of the salary from that state or federal job. If both spouses on a joint return qualify, each spouse may claim the subtraction. The subtraction cannot exceed the actual salary received. If you claim this subtraction, you cannot Claim a credit for Low Income Individuals or Virginia Earned Income Credit.

 

Income Received by Holocaust Victims –Code 40
To the extent included in your federal adjusted gross income, subtract any income resulting from the return or replacement of assets stolen during the Holocaust and throughout the time period leading up to, during, and directly after World War II as a result of: Nazi persecution, an individual being forced into labor against his or her will, transactions with or actions of the Nazi regime, treatment of refugees fleeing Nazi persecution, or holding of such assets by entities or persons in the Swiss Confederation.

 

Payments Made under the Tobacco Settlement –Code 41
Enter the amount of payments received under the Tobacco Master Settlement Agreement, and the National Tobacco Grower Settlement Trust, provided they have not been deducted for federal tax purposes.



Congressional Medal of Honor Recipients Code 44
Enter the amount of military retirement income you received as an individual awarded the Congressional Medal of Honor.

 

Military Death Gratuity Payments –Code 46 

Retroactive to taxable year 2001, survivors of military personnel killed in the line of duty may claim a subtraction for military death gratuity payments made after September 11, 2001, to the extent that the payments were included in federal adjusted gross income.

Certain Death Benefit Payments- Code 49
Allows a beneficiary taxpayer to subtract the death benefit payments received from an annuity contract that are subject to federal income taxation, for taxable years beginning on or after January 1, 2007. In order to qualify for this subtraction, a death benefit payment is required to meet the following criteria: 1) the death benefit payment is made pursuant to an annuity contract with an insurance company; 2) the payment must be awarded to the beneficiary in a lump sum; and 3) the payment must be subject to taxation at the federal level.

Gain from Land Preservation- Code 51
To the extent a taxpayer's federal gain includes gain or loss recognized on the sale or transfer of a Land Preservation Tax Credit, the taxpayer is required to subtract the gain or add back the loss on their Virginia return.

 

Certain Long-Term Capital Gains - Code 52

Provided the long-term capital gain or investment services partnership income is attributable to an investment in a “qualified business” as defined in Va. Code § 58.1-339.4 or any other technology business approved by the Secretary of Technology, it may be allowed as a subtraction. The business must have its principal facility in Virginia and less than $3 million in annual revenues for the fiscal year preceding the investment. The investment must be made between the dates of April 1, 2010, and June 30, 2020. Taxpayers claiming the Qualified Equity and Subordinated Debt Credit cannot claim this subtraction relating to investments in the same business. In addition, no investment is “qualified” for this deduction if the business performs research in Virginia on human embryonic stem cells.

 

Historic Rehabilitation - Code 53

To the extent included in federal adjusted gross income, any amount of gain or income recognized by a taxpayer in connection with the Historic Rehabilitation Tax Credit is allowed as a subtraction on the Virginia return.

 

Other- Code 99
Enter the reason/explanation for other subtractions if using this code.