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.

The EITC in many states is refundable. You'll receive the difference if your credit is more than the taxes you owe, but this isn't 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, either.

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 2021, 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 $43,430

You can add $4,420 for each dependent exemption you have after the first eight.

The Virginia legislature considered two bills in 2015 that would have additionally 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.

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.

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

For example, a family of four that qualifies would receive a credit of $1,200. But remember, this is a nonrefundable credit so you might not receive quite that much. If this family's tax return shows that they owe the state of Virginia $500 in taxes, their CLI is equal to that—just $500, not $1,200. It erases your tax bill, but the state won't be sending you a check for the difference.

The information contained in this article is not tax or legal advice and is not a substitute for such advice. State and federal laws change frequently, and the information in this article may not reflect your own state’s laws or the most recent changes to the law. For current tax or legal advice, please consult with an accountant or an attorney.