Virginia Low Income Tax Credit

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Virginia is among 28 states and the District of Columbia that offer a version of the federal earned income tax credit (EITC). It's called the Credit for Low Income Individuals (CLI). Most states' EITCs are based on a taxpayer's federal EITC and have the same or similar eligibility requirements, but Virginia has its own rules.

Many states' EITCs are refundable. You'll receive the difference in cash if your credit is more than the taxes you owe, but this is not the case in Virginia. The credit can only erase your tax obligation. The state keeps the rest if there's anything left over. You can’t carry over any unused portion to future years.

The Virginia legislature considered two bills in 2015 that would additionally have provided an earned income tax credit to any taxpayer who qualified for the federal EITC. It would have been worth 10% of the federal credit, but both bills failed.

Income Requirements for Virginia’s EITC

Your family's total adjusted gross income (AGI) must fall below federal poverty guidelines or the U.S. Department of Health and Human Services Poverty Guidelines to qualify for Virginia’s low income credit. Your family includes you, your spouse and your dependents if they earn income, even if they don't have to file their own tax returns.

These income requirements are based on the number of dependent exemptions you claim on your tax return, including one for yourself and one for your spouse if you're married. As of 2020, these limits are set at:

  • 1 exemption: AGI must be less than $12,490
  • 2 exemptions: AGI must be less than $16,910
  • 3 exemptions: AGI must be less than $21,330
  • 4 exemptions: AGI must be less than $25,750
  • 5 exemptions: AGI must be less than $30,170
  • 6 exemptions: AGI must be less than $34,590
  • 7 exemptions: AGI must be less than $39,010
  • 8 exemptions: AGI must be less than $43,030

You can add $4,420 for each dependent exemption you have over eight. 

Other Requirements for Virginia’s Low Income Credit

You can't claim this credit if another taxpayer, such as your parent, claims you as a dependent on their tax return. Only one spouse can claim the CLI if they file separate married returns.

You can't claim the credit if you, your spouse, or any of your dependents claim certain other exemptions or deductions on their tax returns, including: 

  • Deductions for wages or salaries received by members of the Virginia National Guard
  • Deductions for up to $15,000 of military basic pay for military service personnel on extended active duty
  • Deductions for up to $15,000 in salary for a federal or state employee whose annual salary is $15,000 or less
  • The additional personal exemption for blind or aged taxpayers 
  • The Virginia age deduction

The Virginia Department of Taxation suggests that you consult with a tax professional if you’re eligible for the extra exemption due to blindness or age. You might be better off claiming the low-income credit if you qualify for both the extra exemption and the low-income credit. A tax professional can tell you for sure. 

How Much Is Virginia’s Earned Income Credit? 

Virginia’s low income credit is $300 for each personal and dependent exemption you claim on your state tax return. Simply multiply the number of your exemptions by $300 to determine the amount of your credit.

For example, your credit would be $1,200 if you have a family of four. But again, this is a nonrefundable credit so you might not receive that much. If you complete your tax return and realize that you owe the state of Virginia $500 in taxes, your CLI is equal to that, just $500. It erases your tax bill, but the state won't be sending you a check for the difference.

Use Virginia’s Schedule ADJ to report the credit and include it when you file your tax return.

NOTE: State tax laws can change frequently and the above information might not reflect the most recent changes. Income limits are current through 2020. Check the Virginia Department of Taxation's website or with a tax professional for any increases or changes that might have occurred. The information contained in this article is not intended as tax advice and it is not a substitute for tax advice.

Article Sources

  1. Urban Institute. "State Earned Income Tax Credits." Accessed July 25, 2020.

  2. Tax Credits for Workers and Their Families. "Virginia." Accessed July 25, 2020.

  3. Virginia Department of Social Services. "Credit for Low Income Individuals." Accessed July 25, 2020.

  4. Virginia Tax. "Low Income Individuals Credit." Accessed July 25, 2020.