Bulletin Number
VTB 85-7
Tax Type
Employer Income Tax Withholding
Description
Military Retirement Pay; Withholding of Virginia IncomeTax
Topic
Withholding of Tax
Date Issued
02-14-1985
Withholding of Virginia Income Tax from Military Retirement Pay
Legislation to permit the withholding of state income taxes from military retirement pay has recently been enacted by Congress as part of the 1985 Department of Defense Authorization Act.
Under this new federal legislation, military retirees would be able on a voluntary basis to have state income taxes withheld from their monthly retirement pay. This would free such retirees from filing and paying quarterly estimated taxes to Virginia.
The federal legislation specifies that any branch of the military shall enter into an agreement to withhold taxes for a state within 120 days of a request to do so; however, Virginia has not requested to enter into an agreement at this time as regulations for participation in such withholding programs will not be published by the Department of Defense until February 1985. After a review of the published guidelines, the Department of Taxation anticipates entering into discussions with the Defense Department, which hopefully will lead to the signing of withholding agreements with the various branches of the military.
Upon the establishment of procedures and the signing of withholding agreements, military retirees in Virginia will likely be contacted by either the Department of Taxation or the Department of Defense in order to determine those retirees wishing to have Virginia tax withheld from their retirement pay. In addition, a Virginia Tax Bulletin will be issued to announce the signing of any withholding agreements.
Tax Bulletins