Virginia Low Income Tax Credit

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Virginia's low income tax credit is called the Credit for Low Income Individuals (CLI). Most states' EITCs are based on a taxpayer's federal EITC. They 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 there, but not 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.

Key Takeaways

  • Virginia is among 29 jurisdictions that offer their own version of the federal earned income tax credit (EITC).
  • Your family’s adjusted gross income (AGI) must be less than the federal poverty guidelines or the U.S. Department of Health and Human Services Poverty Guidelines to qualify.
  • You can’t claim the Virginia credit if you claim certain other deductions on your Virginia tax return.
  • The credit is $300 per family member, but it’s not refundable. The most it can do is erase any tax you owe the state of Virginia—you won’t receive a refund check for any amount that might be left over.

Income Requirements for Virginia’s EITC

Your family's total adjusted gross income (AGI) must fall below either 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 tax year 2021, the year for which you'll file a tax return in 2022, these limits are set at:

  • 1 exemption: AGI must be less than $12,880
  • 2 exemptions: AGI must be less than $17,420
  • 3 exemptions: AGI must be less than $21,960
  • 4 exemptions: AGI must be less than $26,500
  • 5 exemptions: AGI must be less than $31,040
  • 6 exemptions: AGI must be less than $35,580
  • 7 exemptions: AGI must be less than $40,120
  • 8 exemptions: AGI must be less than $44,660

You can add $4,540 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 credit 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. These include: 

  • 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 advise you. 

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, a family of four who qualifiy 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 a check for the difference.

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

Virginia's Credit vs. the Federal Tax Credit

The federal earned income credit is by far the more generous of the two, so don't despair if the rules for the Virginia credit don't work in your favor. You may still be able to claim the EITC on your federal tax return.

The maximum credit, even if you have no qualifying children, is $1,502 as of the 2021 tax year, the return you'll file in 2022. This assumes you meet the low-income requirements. The threshold for a single taxpayer with just one dependent is $42,158, compared to $12,880 for the Virginia credit.

Article Sources

  1. Virginia Department of Taxation. "Low Income Individuals Credit." Accessed Jan. 18, 2022.

  2. Urban Institute. "State Earned Income Tax Credits." Accessed Jan. 18, 2022.

  3. Tax Credits for Workers and Their Families. "Virginia." Accessed Jan. 18, 2022.

  4. IRS. "Earned Income and Earned Income Tax Credit (EITC) Tables." Accessed Jan. 18, 2022.