Here are 4 of the Many “Baker’s Dozens” in the Tax Code

August 2024

A baker’s dozen is commonly understood to mean 13. The Commonwealth’s Tax Code, provides for multiple “baker’s dozens” of tax credits, deductions and subtractions of income available to Virginia taxpayers.  In this issue, we’ll look at four that many taxpayers have found to be of value in reducing their tax bill.

1. Firearm Safety Device (Tax Credit)
2. Child and Dependent Care Expenses (Tax Deduction)
3. Long-Term Health Care Premiums (Tax Deduction)
4. Military Benefits/Military Retirement (Subtractions from Income)

Again, there are many more. Some are very industry specific.
So if you want more info on others that may benefit you, give us a call.

Firearm Safety Device Tax Credit

In March of last year, the General Assembly passed an amendment providing a tax credit to offset the cost of gun safety devices such as gun safes, lockable gun containers and gun locks. Governor Glenn Youngkin signed the bipartisan supported bill which became effective July 2023 and is scheduled to expire at the end of tax year 2027.

During tax year 2023, 1,905 Virginia taxpayers qualified for the new tax credit.

Virginia taxpayers who secure equipment that will keep guns out of the hands of children and criminals are rewarded with a tax credit up to $300. That credit is applied to reduce taxes due plus makes it possible to afford superior equipment to secure a firearm. Taxpayers are permitted one firearm safety device credit in each taxable year for the cost incurred in the purchase of one or more eligible safety devices.

Note: Virginia has allocated a maximum $500 million per taxable year to fund the tax credits which shall be allocated on a first-come, first-served basis.

Itemized Tax Deductions: If you itemize your deductions on your federal income tax return, you must also itemize them on your Virginia return. Most of the same deductions on your federal return may be claimed on your Virginia tax filing. Here are two that have considerable interest for Virginia taxpayers.

Child & Dependent Care Expenses

You may qualify to claim this deduction if:

• You were eligible to claim a credit for child and dependent care expenses on your federal income tax return. 
• You can claim the Virginia deduction even if you weren’t able to claim the federal credit. 

The amount of the deduction is equal to the amount of child and dependent care expenses used to calculate the federal credit (not the federal credit amount). The maximum amount of deduction allowed is based on how many dependents you have:

• $3,000 for one dependent 
• $6,000 for two or more dependents

Long-Term Health Care Premiums

Long-term health care insurance premiums will qualify as a Virginia tax deduction…assuming you did not claim a tax deduction on your federal return for premiums paid during the taxable year.

Military Benefits/Military Retirement – Subtractions from Income

Virginia tax law exempts certain types of income that may have been reported on your federal tax return. The following military benefits may be subtracted from your Virginia taxable income if you are 55 or older in tax year 2023 … and regardless of age beginning with tax year 2024.

• Military retirement income received for service in the Armed Forces of the United States,
• Benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States under the Survivor Benefit Plan program established by the U.S. Department of Defense, 
• Military benefits paid to the surviving spouse of a veteran of the Armed Forces of the United States,
• Qualified military benefits received pursuant to a section of the Internal Revenue Code regarding certain military benefits.

The maximum military benefits subtraction limits are:

• $20,000 for 2023,
• $30,000 for 2024, and
• $40,000 thereafter.

Click here for a comprehensive look at military pay for both enlisted and officer ranks.

Key Takeaways

The Virginia tax code provides a myriad of tax breaks. The above outlines four that have application to many taxpayers in the Commonwealth. If you choose to research further, click on the links below.

• Firearm Safety Device (Tax Credit)
• Child and Dependent Care Expenses (Tax Deduction)
• Long-Term Health Care Premiums (Tax Deduction)
• Military Benefits/Military Retirement (Subtractions from Income)

Better yet…save your time and effort.
Give us a call and we’ll quickly help you with questions.