You can owe Virginia state taxes if you live in another state whenever you earn income from a Virginia source, spend more than 183 days in Virginia while keeping a place to live there, or remain legally domiciled in Virginia. Nonresidents owe Virginia tax only on income tied to the state, such as wages for work physically performed in Virginia, rent from Virginia property, gains from selling Virginia real estate, or profits from a business operating there. Investment income and retirement distributions are generally off limits to Virginia for a nonresident. The top individual rate is 5.75% on taxable income above $17,000, and nonresidents use Form 763 if their Virginia-source income reaches the filing threshold.
When Virginia Treats You as a Resident Anyway
Living in another state is not always enough. Virginia has two separate paths to full residency, and either one makes you taxable on all your income, not just what you earned in Virginia.
The first is domicile. Your domicile is the place you consider your permanent home and intend to return to. Virginia looks at objective evidence rather than what you say: which state issued your driver’s license, where your car is registered, where you vote, where your family lives, the mailing address on your federal return, and where your primary bank accounts sit. If those indicators still point to Virginia after you’ve moved, Virginia can treat you as a domiciliary resident and tax your worldwide income on Form 760.
The second path catches people who have no intention of being Virginia residents. If you maintain a place to live in Virginia and are physically present in the state for more than 183 days during the tax year, Virginia treats you as an actual resident. The days do not need to be consecutive. Someone who keeps an apartment near a Virginia office and works there most of the week can cross the line without realizing it, and the result is the same tax exposure as a lifelong Virginian.
What Counts as Virginia-Source Income
If neither residency path applies, you are a nonresident, and the question becomes which pieces of your income Virginia can reach. The rule is that income is sourced to where the work is performed or where the property sits, not to where your employer is headquartered or where you deposit the check.
Virginia can tax:
- Wages and salaries for work you physically performed inside Virginia, even if your employer is out of state. A consultant who flies in for 40 days of work at a Virginia client site owes Virginia tax on the pay for those 40 days.
- Net rental income from real estate located in Virginia.
- Capital gains from selling Virginia real estate. The settlement agent will typically withhold a portion of the proceeds for Virginia tax.
- Profits from a business operating in Virginia, including income passed through from a partnership, S corporation, or LLC that does business in the state.
Virginia generally cannot tax a nonresident on interest, dividends, or capital gains from stocks, bonds, or mutual funds, unless the investment is tied to a business you run in Virginia. Federal law also blocks Virginia from taxing a nonresident’s pensions, annuities, 401(k) distributions, or IRA withdrawals. Retirement income belongs to your state of domicile.
If You Live in D.C., Kentucky, Maryland, Pennsylvania, or West Virginia
Virginia has reciprocal tax agreements with five jurisdictions: the District of Columbia, Kentucky, Maryland, Pennsylvania, and West Virginia. If you qualify, you skip the Virginia nonresident return entirely and report your Virginia wages only to your home state.
D.C. and Kentucky residents who commute to Virginia and earn only wage or salary income there are exempt from Virginia income tax on those wages. Maryland, Pennsylvania, and West Virginia residents get the same exemption with extra conditions: they must spend 183 days or less in Virginia during the year, cannot maintain a home in Virginia, and their only Virginia income must be wages or salary.
Reciprocity does not happen automatically on your paycheck. You have to file Form VA-4 with your Virginia employer and claim the exemption on Line 3 based on your home state. The form has to be filed each calendar year. If you skip it, your employer withholds Virginia tax by default, and the only way to recover the money is to file a Virginia return.
Reciprocity only covers wages and salaries. If you live in Maryland and collect rent from a Virginia property or run a business in Virginia, that income is still taxable by Virginia.
If You Work Remotely for a Virginia Employer
Virginia uses a physical presence rule, not a “convenience of the employer” test. If you live in another state and work remotely for a Virginia-based company, Virginia generally cannot tax your wages as long as the work is performed outside Virginia. Your income is sourced to where you sit when you do the work.
Hybrid schedules complicate this. If you live in North Carolina and drive to a Virginia office two days a week, the wages for those Virginia workdays are Virginia-source income. You apportion between the two states by workdays and report only the Virginia-day income on Form 763. Keep a dated log of where you worked each day. If Virginia later questions the return, a contemporaneous record is the most persuasive evidence that the rest of the work happened elsewhere.
If You’re Military or a Military Spouse
Federal law overrides Virginia’s residency rules for military families. Under the Servicemembers Civil Relief Act, active-duty members do not change domicile just because orders send them to a Virginia duty station. A servicemember domiciled in Texas and stationed at Fort Belvoir keeps filing as a Texas resident, and Virginia cannot tax the military pay.
The Military Spouses Residency Relief Act extends similar protection. A spouse living in Virginia solely to accompany a servicemember can elect to use the servicemember’s state of domicile, the spouse’s own state of domicile, or the state of the servicemember’s duty station for income tax purposes. The election covers wages the spouse earns from a civilian job in Virginia, which can zero out Virginia income tax on those earnings. The election does not cover investment income, and it covers self-employment income only when the business is driven mainly by the spouse’s personal services rather than capital. To stop Virginia withholding on exempt wages, the spouse files a revised VA-4 with the employer.
Filing the Nonresident Return
You must file a Virginia return as a nonresident if your Virginia adjusted gross income reaches $11,950 (single or married filing separately) or $23,900 (married filing jointly). Even below those thresholds, file if Virginia tax was withheld from your pay or you made estimated payments. Filing is the only way to recover a refund.
The form is Form 763. You report your total federal adjusted gross income, subtract everything not sourced to Virginia, and the remainder is what Virginia taxes.
Virginia’s filing deadline is May 1, not April 15. Every taxpayer gets an automatic six-month extension to November 1 without filing any paperwork for it. The extension covers filing only. Any tax owed is still due May 1, and interest runs on unpaid balances from that date. If you did not pay at least 90% of your liability by May 1, an extension penalty of 2% per month applies to the unpaid balance, up to 12%.
If your expected Virginia tax after withholding and credits exceeds $150, Virginia requires quarterly estimated payments during the year. Falling short triggers an underpayment penalty.
Avoiding Double Tax When Your Home State Also Taxes the Income
If reciprocity does not apply and your home state taxes the same income Virginia is taxing, the fix is a credit rather than an exemption. The general rule is that your state of residence credits you for income tax paid to the other state.
If you are a nonresident paying Virginia tax on Virginia-source income, you usually claim the credit on your home state’s return, not on Form 763. Your home state allows a credit for the Virginia tax, capped at the amount of home-state tax on that same income. If the other state’s rate is higher than Virginia’s, you absorb the gap.
Virginia does allow a limited credit on its own Schedule OSC for nonresidents, but only for residents of Arizona, California, the District of Columbia, or Oregon. For every other state, the credit lives on the home-state return.
When reciprocity is available, use it. Filing a VA-4 and stopping Virginia withholding at the source is cleaner than paying two states and chasing a credit at year end.