Unfortunately, I found out that this is not how it works. VA adjusted gross income threshold is based on the income from all sources aka federal income. The federal income is 60k thus I am required to file. Then VA allocated the income between states and taxed only the VA income. Also CA and VA are reverse states so I couldn't claim a credit on a CA return, but had to claim a credit on a VA return for taxes paid to CA .
This is what I found out. Let me know if you have any other sources.
