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West Virginia Retirement Tax Friendliness

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Overview of West Virginia Retirement Tax Friendliness

Social Security benefits and other types of retirement income are taxed in West Virginia but seniors can claim a deduction to offset those taxes. West Virginia has some of the lowest property taxes in the U.S. Its sales taxes are also quite low.

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West Virginia Retirement Taxes

Photo credit: ©iStock.com/belterz

West Virginia is called The Mountain State and for good reason. Mountains and forest blanket nearly the entire state, 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 is friendly toward retirees. West Virginia has some of the lowest property taxes in the U.S. Its sales taxes are also quite low.

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 those taxes. 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.

Is West Virginia tax-friendly for retirees?

Yes, although just how tax-friendly may depend on your level of income. West Virginia has very low property taxes and sales taxes. Social Security retirement benefits that are taxed federally will also be taxed in West Virginia, at rates ranging from 3% to 6.5%.

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.

Photo credit: ©iStock.com/Joanna Pecha

Is Social Security taxable in West Virginia?

Yes. Social Security retirement benefits that are taxable on your federal tax return will also be taxable on your West Virginia state tax return. Social Security retirement benefits are generally only taxable if you have income from other sources and your total income exceeds a certain level.

To determine if your Social Security retirement benefits may be taxable, combine one half of your annual Social Security income with your income from all other sources. For single filers, if that number is greater than $25,000, your Social Security retirement benefits may be taxable. For joint filers, the limit is $32,000.

Are other forms of retirement income taxable in West Virginia?

Yes. Income from a government pension, a private employer pension, a 401(k), an IRA or any other type of retirement account is taxable. Seniors in West Virginia (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.

Thus, 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. If the sum exceeds $8,000, however, the remainder will be taxed 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.

Income Tax Brackets

Single Filers
West Virginia Taxable IncomeRate
$0 - $10,0003.00%
$10,000 - $25,0004.00%
$25,000 - $40,0004.50%
$40,000 - $60,0006.00%
$60,000+6.50%
Married, Filing Jointly
West Virginia Taxable IncomeRate
$0 - $10,0003.00%
$10,000 - $25,0004.00%
$25,000 - $40,0004.50%
$40,000 - $60,0006.00%
$60,000+6.50%
Married, Filing Separately
West Virginia Taxable IncomeRate
$0 - $5,0003.00%
$5,000 - $12,5004.00%
$12,500 - $20,0004.50%
$20,000 - $30,0006.00%
$30,000+6.50%
Head of Household
West Virginia Taxable IncomeRate
$0 - $10,0003.00%
$10,000 - $25,0004.00%
$25,000 - $40,0004.50%
$40,000 - $60,0006.00%
$60,000+6.50%

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 $579 per year. That’s second lowest in the U.S.

Part of the reason property taxes are so low is that rates are generally quite low. The state’s average effective rate is 0.59%. The other reason property taxes in West Virginia are low is that home values are quite low. The median home value in The Mountain State is less than $100,000. That can be a help for seniors who are looking to move from another part of the country.

What is the West Virginia homestead exemption?

The West Virginia homestead exemption is a program that helps lower the property tax burden on seniors. It is available to anyone over the age of 64 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. That is equal to about $33,000 off of the property’s market value.

How high are sales taxes in West Virginia?

Fairly low. The state sales tax rate is 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 6.5%. West Virginia also has sales tax exemptions for groceries and prescription drugs.

What other West Virginia taxes should I be concerned about?

West Virginia had an estate tax until 2005 but has since phased that tax out. It has a number of sin taxes including a tax on cigarettes and a tax on alcohol. Both of these rank among the lowest in the U.S., however.

Most Tax Friendly Places for Retirees

SmartAsset’s interactive map highlights the places in the country with tax policies that are most favorable to retirees. Zoom between states and the national map to see the most tax-friendly places in each area of the country.

Highest
Lowest
Rank City Income Tax Paid Property Tax Rate Sales Tax Paid Fuel Tax Paid Social Security Taxed?

Methodology Our study aims to find the areas with the most tax-friendly policies for retirees. To do that we looked at how the tax policies of each city would impact a retiree with a $50,000 income. Our hypothetical retiree is getting $15,000 from Social Security benefits, $10,000 from a private pension, $15,000 from retirement savings like a 401(k) or IRA and $10,000 in wages.

To calculate the expected income tax this person would pay in each location we applied deductions and exemptions. This included the standard deduction, personal exemption and deductions for each specific type of retirement income. We then calculated how much this person would pay in income tax at the federal, state, county and local levels.

We calculated the effective property tax rate by dividing median property tax paid by median home value for each city.

In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a city by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.

For fuel taxes, we first distributed statewide vehicle miles traveled down to the city level using the number of vehicles in each county. We then calculated miles driven per capita in each city. Using the nationwide average fuel economy, we calculated the average gallons of gas used per capita in each city and multiplied that by the fuel tax.

For each city we determined whether or not Social Security income was taxable.

Finally, we created an overall index weighted to best capture the taxes that most affect retirees. We gave a 4x weighting to income tax, 3x weighting to property tax rate, a 2x weighting to sales tax and 1x weighting to fuel tax.

Sources: Internal Revenue Service, Social Security Administration, state websites, local government websites, US Census Bureau 2015 American Community Survey, Avalara, American Petroleum Institute, GasBuddy, UMTRI, Federal Highway Administration

More from SmartAsset
  • Calculate your Income Taxes in West Virginia
  • Calculate your Property Taxes in West Virginia
  • Retirement Tax Friendliness Overview