Charleston, West Virginia – Governor Jim Justice has signed House Bill 4880, which will phase out the state income tax on Social Security benefits over the next three years. This move comes as a relief to many retirees and seniors in West Virginia who have been burdened by this tax on their retirement income.
The bill will eliminate the state income tax on Social Security benefits for single filers earning more than $50,000 and couples with incomes exceeding $100,000. This tax reduction was a contentious issue in the state legislature, with the House version of the bill eventually passing the Senate during the regular session.
AARP State Director, Gaylene Miller, expressed her approval of the phased approach to eliminating the tax. She stated, “For far too long, West Virginia has been an outlier in its tax treatment of Social Security income. I’m pleased to say that both the Senate and the House unanimously passed the bill, signaling a positive change for our seniors.”
Governor Justice initially favored a one-time elimination of the tax, but the decision to phase it out over three years was seen as a more financially prudent approach. This gradual phase-out will reduce the impact on tax revenues from $37 million in the first year to $12 million.
Effective retroactively from January 1 of this year, the tax elimination will apply to taxes filed in 2025. Subsequently, there will be a 35% reduction in the tax burden on Social Security income for the 2026 filing, leading to a complete elimination of the tax by the time 2026 taxes are filed in 2027.
AARP, an organization advocating for the interests of individuals over 50, highlighted the removal of the tax on Social Security benefits as a top priority for its West Virginia members. This significant change in state tax policy is expected to provide financial relief to many retirees and seniors who rely on Social Security for their income.
Overall, the phase-out of the state income tax on Social Security benefits in West Virginia represents a positive step towards supporting the financial well-being of seniors and retirees in the state. This move is expected to have a tangible impact on individuals’ retirement savings and quality of life.