Virginia Capital Gains Tax Rate (2026)
Virginia capital gains tax overview
Four brackets from 2% to 5.75%. Virginia taxes capital gains as ordinary income.
Federal + Virginia combined rates
Your total capital gains tax bill includes both layers — federal and state. Here is what a Virginia investor pays in 2026 for long-term gains:
| Federal Long-Term Rate | Virginia State Rate | Combined Rate | Plus NIIT (if applicable) |
|---|---|---|---|
| 0% | 5.75% | 5.75% | 9.6% |
| 15% | 5.75% | 20.8% | 24.6% |
| 20% | 5.75% | 25.8% | 29.6% |
The NIIT (Net Investment Income Tax) adds an extra 3.8% for taxpayers whose MAGI exceeds $200,000 (single) or $250,000 (married filing jointly). It is a federal tax only — Virginia does not have an equivalent.
How Virginia compares to other states
Virginia's top rate of 5.75% places it in the lower-middle tier of state capital gains taxation. For comparison:
- Zero-tax states (FL, TX, NV, etc.): 0% — total with 15% federal = 15%
- Low-rate states (AZ, IN, PA): 2.5–3.1% — total with 15% federal = 17.5–18.1%
- Virginia: 5.75% — total with 15% federal = 20.8%
- High-rate states (NY, NJ): 10.75–10.9% — total with 15% federal = ~26%
- California: 13.3% — total with 15% federal = 28.3%
Tax-reduction strategies for Virginia residents
With a top state rate of 5.75%, minimizing capital gains tax is particularly important in Virginia. Key strategies:
- Hold over 1 year for long-term federal rates (0/15/20%). Virginia does not offer a preferential state rate, but federal savings alone are often 7–17%.
- Tax-loss harvesting: Offset your gains with losses realized in the same year. A $20,000 loss offsets $20,000 of gains dollar-for-dollar, saving up to 26% ($5,150) on that $20,000 at top rates.
- 0% bracket planning: In lower-income years (retirement, sabbatical, between jobs), realize gains at the federal 0% rate. You still owe Virginia state tax, but eliminating the federal component is significant.
- Donate appreciated stock directly to charity or a donor-advised fund to avoid capital gains tax entirely while generating a charitable deduction for the full fair market value.
- Installment sales: If selling a business or real estate, structuring as an installment sale spreads the gain over multiple years, potentially keeping each year's gain in a lower bracket.
Detailed Virginia capital gains tax rules
Tax history and legal basis
Virginia taxes capital gains as ordinary income with a progressive system. The top rate of 5.75% kicks in at just $17,001 of taxable income — meaning most filers with capital gains pay the top rate.
Exemptions and special treatment
Virginia does not offer preferential capital gains rates. The state's brackets are very compressed — the top rate applies from $17,001, so virtually all capital gains are taxed at 5.75%. Virginia does allow a $930 personal exemption per filer/dependent, which is minimal.
Filing requirements
File Form 760 (resident). Virginia starts with federal AGI. The state is notable for having very low bracket thresholds — functionally it's almost a flat 5.75% tax. Estimated payments required if owing $150+. Filing deadline is May 1 (later than most states).
Recent changes and legislative updates
Virginia's compressed brackets mean the 5.75% rate functions as a flat tax for most filers with investment income. Efforts to raise the filing threshold or add new brackets have not advanced. Northern Virginia's high cost of living combined with the state tax and proximity to D.C. makes tax planning important for investors there.
Worked example: $50,000 capital gain in Virginia
Here's exactly what a Virginia resident would owe on a $50,000 long-term capital gain with $80,000 in other income (single filer, 2026):
| Component | Amount | Notes |
|---|---|---|
| Capital gain | $50,000 | Long-term (held over 1 year) |
| Federal tax (15%) | −$7,500 | Based on $80,000 ordinary income + gain |
| Virginia state tax (5.75%) | −$2,875 | Applied to the full gain amount |
| Total tax owed | −$10,375 | Federal + state combined |
| You keep | $39,625 | 79.3% of your gain |
After both federal and Virginia state tax, you keep $39,625 of your original $50,000 gain. The effective combined rate is 20.8%.
Frequently asked questions — Virginia
Does Virginia tax short-term and long-term gains differently?
No — Virginia taxes both short-term and long-term capital gains as ordinary income at the same rates as wages. There is no state-level preferential rate for patience. The federal system, however, taxes long-term gains at 0/15/20% vs. up to 37% for short-term — a significant difference that applies regardless of state.
Do I need to file a Virginia tax return if I only have capital gains?
If you have capital gains income and meet Virginia's filing threshold, you are required to file a Virginia state income tax return. The threshold is typically similar to the standard deduction amount — check the VA Department of Revenue for the current year's filing requirements.
What if I moved to Virginia mid-year?
If you moved to Virginia during the year, you are a part-year resident. Virginia generally taxes capital gains realized while you were a Virginia resident. Gains realized before you moved may be taxable by your prior state. Keep detailed records of when each sale occurred relative to your move date.