Income tax, state; subtractions, uniformed services and foreign service retirement benefits.

Income tax subtractions; uniformed services and foreign service retirement benefits. Provides that, for taxable years beginning on and after January 1, 2027, (i) the military retirement income tax subtraction allowed under current law shall include retirement income of uniformed service members and (ii) up to $40,000 of United States Foreign Service member retirement benefits shall be subtracted in computing Virginia taxable income.

Source: OpenStates · fetched February 18, 2026

• Veteran / service memberdirectModerate impactHigh certainty

  Will receive a subtraction for military retirement income, reducing their Virginia taxable income.

  “the military retirement income tax subtraction allowed under current law shall include retirement income of uniformed service members”· Provides that, for taxable years beginning on and after January 1, 2027, (i) the military retirement income tax subtraction allowed under current law shall include retirement income of uniformed service members

Fiscal impact: Moderate (The fiscal impact is expected to be moderate due to the expansion of tax subtractions for military and foreign service retirement benefits, which will reduce state tax revenue.)