It's penalty for not paying enough tax during the year thru withholding or estimated tax
Per instructions for VA (link below) - "Line 18 Addition to Tax: Use Form 760C to compute any addition to tax you may owe for underpayment of estimated taxes... You will not owe an addition to tax if each payment is made on time and:
- you owe $150 or less in tax with your return.
- total withholding and timely estimated payments were at least 90% (66 2/3% for farmers, fishermen and merchant seamen) of your 2024 tax liability after nonrefundable credits or 100% of your 2023 tax liability after nonrefundable credits.
- you meet one of the exceptions computed on Form 760C or Form 760F. Enclose Form 760C or 760F showing the computation."
You may have paid the amount due by the filing deadline, but if it wasn't paid on a timely/even basis thru the year up to the minimum 'safe harbor' amount (100% of your 2024 tax, or 90% of your 2025 tax whichever is smaller), then a penalty will be calculated - similar to Fed penalty on Form 2210.
If you had a large income event due to Roth conversion, cap gains etc and did pay estimated tax later in the year just not evenly thru the year, you may be able to reduce or eliminate the penalty by applying the Annualized Income method - for Fed this is under Other Tax Situations / Underpayment Penalty; VA program has a similar section; tho this can be a lot of work and depends on your situation. If you met safe harbor amount - or even had a refund - you can still get a penalty if you didn't pay evenly thru the year and had an underpayment earlier in the year, as the calculation is done quarterly.
https://www.tax.virginia.gov/sites/default/files/vatax-pdf/2024-760-instructions.pdf
