Va. Code Ann. § 21-401

The bonds and coupons issued under and by authority of this and other sections of this chapter shall be exempt from all county or municipal taxation or assessment, direct or indirect, general or special, whether imposed for purposes of general revenue or otherwise, and the interest thereon shall not be subject to taxation as for income, nor shall such bonds and coupons be subject for taxation when constituting a part of the surplus of any bank, trust company, or other corporation, but when constituting a part of such surplus shall be deducted from the total assets in order to ascertain the taxable value of such shares.