When people begin thinking seriously about where they want to retire, taxes inevitably enter the conversation. Florida, Tennessee and other states with no individual income tax tend to get much of the attention.
But taxes are only part of the equation. And for many retirees—particularly those considering a move from the Northeast or the Washington metropolitan area—Virginia deserves a closer look.
Virginia is not a “no-tax” state, nor is it among the very lowest-tax states in America. Its individual income tax tops out at 5.75%. But looking only at that number misses several important advantages Virginia offers retirees.
Virginia doesn’t tax social security
Perhaps the most important is that Virginia does not tax Social Security benefits.
Even when a portion of Social Security is taxable on a federal return, Virginia allows that amount to be subtracted when calculating Virginia taxable income. For a retired household receiving a substantial portion of its income from Social Security, that can make a meaningful difference.
Virginia also provides an age deduction of up to $12,000 per qualifying taxpayer age 65 or older, although for most of today’s retirees the deduction is income-dependent and phases out at higher income levels.
Most other retirement income—including traditional IRA and 401(k) distributions and pensions—is generally subject to Virginia income tax.
So Virginia isn’t the lowest-tax choice for every retiree. But depending upon the sources of your retirement income, the picture may be considerably more favorable than the state’s 5.75% top income-tax rate suggests.
Property taxes are surprisingly reasonable
For homeowners, another important consideration is real-estate taxes.
According to the Tax Foundation’s 2026 comparison, Virginia’s effective property-tax rate on owner-occupied homes is approximately 0.78% of home value, compared with 1.30% in New York, 1.54% in Connecticut and 1.88% in New Jersey.
The chart below shows the real estate tax rate in the seven counties surrounding Charlottesville. All but Albemarle County are below the state average
That difference becomes significant for someone who owns a valuable home.
| County | Rate per $100 | Rate per $1,000 | Annual tax on $500,000 |
| Albemarle | $0.894 | $8.94 | $4,470 |
| Orange | $0.62* | $6.20 | $3,100 |
| Madison | $0.53 | $5.30 | $2,650 |
| Greene | $0.70 | $7.00 | $3,500 |
| Nelson | $0.56 | $5.60 | $2,800 |
| Fluvanna | $0.755 | $7.55 | $3,775 |
| Louisa | $0.72 | $7.20 | $3,600 |
No Virginia estate or inheritance tax
Virginia currently imposes neither an estate tax nor an inheritance tax.
For retirees who have accumulated significant assets and are thinking not only about retirement but also about what they eventually leave their children and grandchildren, that is another consideration worth including in the equation.
But there is a Virginia tax you should know about
There is no point pretending every tax in Virginia is favorable.
Virginia localities tax automobiles as personal property, something that surprises many newcomers. Depending upon where you live and the value of your vehicles, that annual bill can be significant.
I’ve always believed people making a major financial decision are better served by knowing both sides of the story. Virginia isn’t a tax haven. What it offers instead is a relatively moderate tax environment combined with something harder to put into a spreadsheet: an exceptional quality of life.
And that is where central Virginia becomes particularly interesting
I’ve spent my career selling real estate in the Charlottesville area, and what continues to strike me is how many things we have here that people are looking for when they retire.
We have four distinct seasons, but generally without the prolonged winters found farther north. The Blue Ridge Mountains form the backdrop to some of the most beautiful countryside in the East. Within a relatively small area, you can choose between living in Charlottesville, a traditional neighborhood, a golf or retirement community, a small farm, or a house on acreage where your nearest neighbor may be half a mile away.
Charlottesville also benefits enormously from the presence of the University of Virginia. UVA brings educational and cultural opportunities that would be unusual for a community this size, as well as access to a major academic medical center.
Add an unusually good restaurant scene, wineries and breweries, hiking and outdoor recreation, historic sites and a major airport—and there is plenty to do without living in a major metropolitan area.
And when you do want the city, Richmond and Washington are within reach.
Perhaps the better question isn’t “Which state has the lowest taxes?”
If minimizing state taxes were the only objective in choosing where to retire, the decision would be fairly simple. Move to a state with no individual income tax.
But most of us aren’t choosing where to spend the next twenty or thirty years based solely on a tax return.
We want good medical care. We want natural beauty. We want interesting people and things to do. We want reasonable access to our children and grandchildren. We want an airport nearby. And many of us would like enough land and privacy to enjoy the country without being isolated from civilization.
That’s where Virginia—and Central Virginia in particular—becomes a very compelling alternative.
For someone leaving New Jersey, New York, Connecticut, Maryland or the Washington suburbs, the question might not be whether Virginia has the absolute lowest taxes.
A better question may be:
What will it cost me to live there, and what kind of life will I get in return?
After more than four decades of watching people discover Charlottesville and the surrounding Virginia countryside, I think the answer to that question compares very favorably indeed.
A significant tax savings can be enjoyed by owning property protected by a conservation easement where the conserved land is taxed at a much lower rate. Here is an example in Albemarle County of. A lovely farm listed at $1,795,000 with annual taxes of only $5884 per year.
Tax laws and individual circumstances vary. The tax information above is intended as general information, not tax advice. Anyone considering a move should consult a qualified tax professional regarding his or her particular circumstances.
