Taxation of Social Security Benefits
West Virginia remains one of 10 states that impose some state income tax on Social Security benefits. The federal government may tax up to 85% of benefits if combined income exceeds a threshold. Combined income is adjusted gross income, plus nontaxable interest, plus half of benefits.
State Tax Structures and Implications
- West Virginia is the 28th most regressive state tax system.
- Income disparities are larger after state taxes are collected.
- Tax features:
- Graduated income tax, though top rate kicks in at $60,000.
- Refundable property tax credit to low-income taxpayers.
- Requires combined reporting for corporate tax.
- State sales tax excludes groceries.
Best States for Retirement
- Iowa is best for retirement, followed by Delaware and West Virginia.
Tax-Friendly States for Retirees
Virginia has a flat income tax rate, which means that retirees can keep more of their money. The state also has a generous homestead exemption, which allows retirees to keep more of their home’s value.
Social Security Taxation in Other States
With Nebraska and Missouri exempting Social Security benefits from state income tax, the list of states retaining this provision is now down to 10. Missouri in 2024 did away with the income thresholds previously in place and moved to full exemption. The remaining states where Social Security benefits are taxed: Colorado, Connecticut, Kansas, Minnesota, Montana, Nebraska, New Mexico.
Retirement in West Virginia
High cost of living: West Virginia’s cost of living is generally lower than the national average, making it an affordable option for retirees on a fixed income. However, some areas of the state may have higher costs of living, and retirees should carefully consider their budget and lifestyle before moving.
Benefits of Retiring in Virginia
- The state does not tax Social Security benefits.
- You can deduct up to $12,000 in retirement income and pension as a senior.
- Crime rates are well below national averages, including third lowest in violent crime.
- Virginia boasts 127 primary care physicians per 10,000 residents.
- It’s home to 89 full-service hospitals, which is high for a smaller state.
Social Security Benefits and Age Requirement
Social Security benefits are only available after reaching 62 years of age, with full benefits typically achieved at 67 years old in West Virginia. According to a recent survey, the median income for retirees aged 65 and over was $44,615 in Virginia.