Are any types of investment income non-taxable?

Yes, some types of investment income are non-taxable in Virginia. Generally, interest income from deposits in banks, savings and loan associations, and credit unions is not taxable. Additionally, most types of federally tax-exempt interest income, such as US government bonds, are also non-taxable in Virginia. Dividends or other distributions from tax-exempt organizations or certain foreign corporations are also non-taxable. Virginia also allows an exclusion for certain kinds of dividend income from certain regular Virginia corporations. Gains from the sale or exchange of stock investments are also non-taxable in Virginia, as are capital gains from real estate, as long as the proceeds are reinvested in qualifying property. Virginia does not tax proceeds from life insurance policies, annuities, inheritances, or other forms of deferred compensation. In addition, distributions from qualified retirement plans are not subject to Virginia taxation. The Virginia Tax Commissioner provides guidance on all types of income subject to taxation in Virginia, so it is best to review his guidelines if you have any questions or concerns.

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Are any types of investment income non-taxable?

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