In response to growing concerns about taxing Social Security benefits at the state level, West Virginia has embarked on a process to completely eliminate the taxation of these benefits, culminating in full exemption by the 2026 tax year.
The state's initiative started in 2022, when it introduced partial exemptions targeting seniors with adjusted gross incomes (AGIs) below specific limits. Single filers with federal AGIs of $50,000 or less, as well as married couples with AGIs of $100,000 or less, became fully exempt from state taxation on their Social Security benefits from that point onward.
For retirees exceeding these income brackets, available exemptions increased incrementally. In 2024, 35% of Social Security benefits became exempt for individuals with higher AGIs. The exemption rate rose to 65% in 2025 and will reach 100% in 2026, effectively resulting in no state taxation on Social Security benefits regardless of income.
This phased approach means that many lower-income beneficiaries have already operated without a state tax burden on their Social Security income. The upcoming full exemption will predominantly aid higher-income seniors who, up until now, have been obligated to pay taxes on portions of their Social Security benefits.
Notably, residents with incomes above the exemption thresholds should anticipate that state taxes on some Social Security income will still apply when they file their 2025 returns this year, prior to the complete phase-out taking effect.
Under these changing conditions, retirees are encouraged to seek guidance from qualified accountants or tax professionals familiar with West Virginia’s evolving tax landscape. These experts can provide tailored advice on how the elimination of Social Security benefit taxation will influence individual financial situations moving forward.
The broader trend reflects increasing dissatisfaction with state-level taxation of retirement income, prompting policy adjustments to reduce the financial burden on seniors. West Virginia’s stepwise policy adjustment aligns with this movement, ensuring a gradual transition that allows taxpayers to adapt accordingly.
As the state approaches the final stage of exemption, retirees can anticipate keeping a greater portion of their Social Security benefits, potentially impacting retirement planning and net income calculations.