VA HB959

Allows Virginia taxpayers to subtract 20% of federal Civil Service Retirement System (CSRS) benefits from their state taxable income beginning January 1, 2026

Applies specifically to retirement benefits received under Subchapter III of Chapter 83 of Title 5 of the United States Code (5 U.S.C. § 8331 et seq.)

Amends Virginia Code § 58.1-322.02, which governs subtractions from Virginia taxable income

Introduced by Delegate Watts on January 14, 2026, and prefiled January 13, 2026

Targets federal employees who retired under the older CSRS pension system rather than the newer Federal Employees Retirement System (FERS)