In a move expected to bring financial relief to tens of thousands of retirees, West Virginia has announced it will fully phase out the state income tax on Social Security benefits by 2026. The phased approach begins in 2025, with 65% of Social Security income exempt from state taxation, followed by full exemption in 2026.
This tax reform applies to all Social Security recipients, regardless of income level, marking a significant departure from previous policies that limited the exemption based on earnings thresholds. The change will benefit an estimated 50,000 West Virginians who were previously ineligible for the tax break under the old income-based rules.
Governor Jim Justice and state lawmakers celebrated the legislation as a meaningful step toward supporting retirees and encouraging aging West Virginians to remain in the state during retirement. “This is about taking care of our people who have worked hard all their lives,” said Gov. Justice. “By removing the tax on Social Security, we’re helping ensure that our seniors can keep more of what they’ve earned.”
The move also aligns West Virginia with the growing number of states that have opted to reduce or eliminate taxes on Social Security income in recent years. As of 2024, 38 states do not tax Social Security benefits, either because they have no state income tax or because they have chosen to fully exempt these benefits.
Advocates for senior citizens and financial planners have long pushed for such reforms, citing rising costs of living and the need for greater financial security among aging populations. The state’s phased plan allows both taxpayers and government agencies to adjust gradually while still delivering tangible relief within a short timeframe.
By 2026, 100% of Social Security benefits will be exempt from state income tax, providing direct savings for retirees across West Virginia and making the state more attractive for those considering where to settle during their retirement years.
The change is expected to not only ease the financial burden for seniors but also potentially stimulate local economies as retirees have more disposable income to spend within their communities.
West Virginians currently receiving Social Security are encouraged to consult tax professionals as the policy is implemented in stages to ensure proper planning and accurate filing in the years ahead.