WEST VIRGINIA
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The Mountain State
BOTTOM LINE: TAX-FRIENDLY
West Virginia uses the federal income-tax form as the starting point for its state income tax. So any amount of retirement income that is taxable and included in federal adjusted gross income is taxable in West Virginia. Ditto for Social Security benefits. The state does offer some retirement-income exemptions, however. Sales taxes are reasonable, and seniors are eligible for a discount card. Property is assessed at 60% of fair market value; West Virginia's net real estate taxes are among the lowest in the U.S., according to a study by the Lincoln Institute of Land Policy and the Minnesota Taxpayers Association.
STATE SALES TAX
6% (prescription drugs are exempt). Food is taxed at 1%, as of July 2012. However, prepared food items, food sold through vending machines and soft drinks are taxed at 6%. Seniors 60 and older are eligible for the Golden Mountaineer Discount Card, which can be used for pharmaceutical, retail and professional discounts. Some municipalities may add a local sales tax of up to 1%.
INCOME-TAX RANGE
Low: 3% (on up to $10,000 of taxable income)
High: 6.5% (on taxable income up to $60,000)
SOCIAL SECURITY
Social Security benefits are taxed to the extent that benefits are taxed by the federal government.
EXEMPTIONS FOR OTHER RETIREMENT INCOME
The beginning point for West Virginia taxation is federal adjusted gross income. Therefore, the amount of IRA distributions, pension income or Social Security benefits that is taxable and included in federal adjusted gross income is taxable on West Virginia's income-tax return. Taxpayers 65 and older may exclude the first $8,000 of any type of retirement income ($16,000 for married couples) from West Virginia taxes. Out-of-state pensions qualify for the $8,000/$16,000 exemption, too. Residents can exempt $2,000 of civil or state pensions.
A Family Tax Credit is also available to income-eligible families to reduce or eliminate their West Virginia personal income tax.
PROPERTY TAXES
Each county and municipality can impose its own rates of property taxation within the limits set by the West Virginia Constitution. Property is assessed at 60% of fair market value. The West Virginia legislature sets the rate of tax of county boards of education, which all of the state's county school boards use. However, the total tax rate for county boards of education may differ from county to county due to excess levies. The total tax rate is a combination of the tax levies from four state taxing authorities: state, county, municipal and schools.
Tax breaks for seniors: Senior citizens eligible for the Homestead Exemption Program may be entitled to a Senior Citizens Tax Credit. The credit is based on the amount of property taxes paid on the first $20,000, or portion thereof, of the taxable assessed value over the $20,000 homestead exemption. (New residents have a two-year waiting period to qualify for the homestead exemption.)
Seniors who are 65 or older and who experience a property tax increase of at least $300 on their owner-occupied West Virginia home may qualify for the Senior Citizen Property Tax Deferment if their income is no more than $25,000. The credit must be approved by the county assessor's office. The state's Homestead Excess Property Tax Credit is a refundable personal income tax credit for real property taxes paid in excess of income. The maximum refundable tax credit is $1,000. People who pay the federal alternative minimum tax, or AMT, are not eligible for these credits. Seniors also can choose only one of the three credit alternatives.
INHERITANCE AND ESTATE TAXES
There is no inheritance tax and no estate tax.
Visit RetirementLiving.com for a complete rundown of taxes in West Virginia.
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