Virginia Tax Commissioner Issues Letter Ruling on Eligibility for Retirement Income Subtraction

The Virginia Tax Commissioner ruled that the taxpayer qualifies for the state’s retirement income subtraction. The taxpayer sought clarification on whether his annuity payments from a pension plan, to which he contributed while employed in another state, qualify for Virginia’s retirement income subtraction. The ruling confirms that the taxpayer is eligible for the subtraction since his contributions were deductible for federal tax and taxed by the other state. The taxpayer must use the simplified method under IRC Section 72(d)(1)(B) to determine the portion of pension distributions that is subtractable. [Va. Dep’t of Tax’n, Ruling of the Comm’r PD 25-66, 05/14/25] ...