West Virginia Retirement Tax Friendliness

West Virginia Retirement Taxes

West Virginia is called The Mountain State and for good reason. Mountains and forest blanket nearly the entire area within its borders, from the Alleghenies that run along the state’s eastern border to the Ohio River Valley in the west. For retirees who love outdoor activities like kayaking, birding, fishing and hiking, West Virginia can be a great choice.

It isn’t just the state’s natural beauty that makes it a good retirement destination, however. The state is also very affordable, with a tax system that's friendly toward retirees. West Virginia has some of the lowest property taxes in the U.S., and sales taxes are fairly cheap.

As described below, Social Security benefits and other types of retirement income are taxed in West Virginia, but seniors can claim a deduction to offset them. That, combined with West Virginia’s low cost of living, means it can be possible for a retiree to live in the state on a relatively small annual income.

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Is West Virginia tax-friendly for retirees?

The state is tax-friendly, although how tax-friendly it is may depend on your level of income. For starters, West Virginia has very low property and sales taxes. A percentage of the Social Security retirement benefits that are taxed federally will not be taxed in West Virginia.

Other types of retirement income are also taxable, but can be deducted up to $8,000 per person. Thus, if you have significant retirement income from, say, an IRA, your taxes in West Virginia may be quite high. On the other hand, if you rely mostly on Social Security income with only supplemental income from a pension or retirement account, your tax bill will be fairly low.

Is Social Security taxable in West Virginia?

Some of the Social Security retirement benefits that are taxable on your federal tax return will be taxable on your West Virginia state tax return. However, the state is beginning to phase out this tax. Here's a breakdown of how it will shake out:

• 2024 tax year: 35% of Social Security benefits are exempt from West Virginia taxable income
• 2025 tax year: 65% of Social Security benefits are exempt from West Virginia taxable income
• 2026 tax year: all Social Security benefits are fully exempt from West Virginia taxable income

Are other forms of retirement income taxable in West Virginia?

Retirement income from a government pension, private employer pension, 401(k), IRA or any other type of retirement account is taxable. Seniors in West Virginia, meaning anyone 65 or older, can claim a deduction against that income. The deduction is $8,000 per person and applies across all forms of retirement income.

So if you have $4,000 annually in pension income and $4,000 in income from an IRA, you will not need to pay income taxes on that retirement income. Married couples can each claim this, for a total of $16,000 for joint filers. If the sum exceeds $8,000, however, you will pay tax on at the rates shown in the income tax table below.

There is an additional $2,000 deduction available to taxpayers with government pension income. There is no age limit for this deduction, but it only applies to income from a government pension.

How high are property taxes in West Virginia?

West Virginia has some of the lowest property taxes of any U.S. state. The median property tax paid by homeowners in West Virginia is just $809 per year.

Part of the reason that property taxes due are so low is that tax rates and home values are generally quite low. The state’s average effective rate is 0.55%, and the median home value is less than $150,000. Those low costs can be a major help for seniors looking to move from another part of the country.

What is the West Virginia homestead exemption?

The West Virginia homestead exemption program helps to lower the property tax burden on seniors. It is available to anyone age 65 or older who owns and occupies their home and has paid taxes on that home for at least two consecutive years prior to applying for the exemption. Qualifying homeowners receive an exemption of $20,000 on the assessed value of the property.

How high are sales taxes in West Virginia?

West Virginia's sales tax rate is fairly low at 6%. A small number of cities also collect local rates ranging from 0.5% to 1%. The total rate in Charleston, the state capital, is 7%. West Virginia also has sales tax exemptions for groceries and prescription drugs.

What other West Virginia taxes should I be concerned about?

West Virginia no longer has an estate tax. Otherwise, there are no other major taxes that retirees need to worry about. There are sin taxes, which every state charges on goods like alcohol and cigarettes, but West Virginia’s are among the lowest in the U.S.