Based on Federal AGI

The calculation of VAGI starts with your federal adjusted gross income (AGI). Copy this number directly from your federal tax form, rounding to the nearest dollar.

Additions

Use Schedule ADJ to determine whether anything needs to be added to your federal AGI. The most common such item is out-of-state interest income that is exempt from federal taxes but not Virginia taxes, Most taxpayers will have no additions on Schedule ADJ.

Age Deduction

Taxpayers age 65 and older are allowed to take an age deduction from their federal AGI. As of the 2009 tax year, this deduction was a maximum of $12,000 per person.

Subtractions

Taxpayers can subtract from their federal AGI any Social Security benefits and/or Virginia tax refunds reported as income on their federal form. Schedule ADJ includes a few other subtractions, most notably disability income and interest income exempt from Virginia taxes but not federal taxes.

Translating to AGI

Total up all your additions, and add this number to your federal AGI. Then total up all your subtractions--including the age deduction, if any--and subtract it from that number. This gives you your Virginia adjusted gross income.

Source:

Virginia Department of Taxation: Form 760 Instructions (2008 Tax Year)

Resource:

Virginia Department of Taxation: Form 760 (2008 Tax Year)

Virginia Department of Taxation: Schedule ADJ (2008 Tax Year)