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West Virginia State Tax

West Virginia State Tax

Introduction

West Virginia, the Mountain State, boasts a magnificent landscape, rich history, and a unique culture. It is also home to some of the lowest state taxes in the country, which has been attracting investors and retirees from across the U.S. In this article, we will explore West Virginia’s state tax system, its unique features, and the recent changes that have been made to it.

West Virginia’s Tax System: An Overview

West Virginia is one of the few states that levy a tax on income, sales, and property. It also charges an excise tax on tobacco products, alcohol, and gasoline. Below is a breakdown of West Virginia’s state taxes:

Income tax: West Virginia imposes a progressive income tax system ranging from 3% to 6.5%. The state has five tax brackets, and the rates are based on an individual’s or a couple’s taxable income. The state allows itemized deductions, standard deductions, and personal exemptions.

Sales tax: West Virginia charges a 6% sales tax on most goods and services sold within its state borders. The sales tax rate is reduced to 5% for food purchased for home consumption. The state also allows local sales taxes, which range from 0% to 1%.

Property Tax: West Virginia’s property tax system is based on the assessed value of the property. The state’s average effective property tax rate is 0.59%, which is below the national average of 1.07%. However, local governments have the authority to add levies and millage rates to the property tax, which can increase the tax amount.

Excise Tax: West Virginia charges an excise tax on tobacco, alcoholic beverages, and gasoline. The rate of the tax varies depending on the product. The excise tax on cigarettes is $1.20 per pack, and the tax on gasoline is 35.7 cents per gallon.

West Virginia State Tax Laws and Regulations

West Virginia law and regulations govern the state’s taxation system. The state’s primary tax authority is the West Virginia Department of Revenue, which administers tax laws, regulations, and policies. Some of the notable tax laws and regulations in the state include:

West Virginia Tax Code: The West Virginia Tax Code contains all the state’s tax laws, regulations, and policies. The code is regularly updated to reflect changes in the tax system.

West Virginia Tax Regulations: The West Virginia Tax Regulations provide guidelines on how to interpret the tax code. They help taxpayers understand their tax obligations better and ensure that the state’s tax laws are applied consistently.

West Virginia Tax Bulletins: The West Virginia Tax Bulletin is a periodic publication that provides updates on tax laws, regulations, and policies. The publication is available online and is free to access.

West Virginia Taxpayer Bill of Rights: The West Virginia Taxpayer Bill of Rights outlines the rights and protections that taxpayers have under West Virginia tax law. It also provides information on how to file a complaint if a taxpayer believes that their rights have been violated.

Recent Changes in West Virginia’s Tax System

West Virginia’s tax system has undergone several changes in recent years. Some of the notable changes include:

Tax Cuts: In 2017, the West Virginia Legislature passed a tax reform package that included several tax cuts. The package cut the state’s corporate income tax rate from 6.5% to 6%, the personal income tax rate from 6.5% to 5.9%, and the sales tax rate from 6% to 5%. The tax cuts were intended to stimulate economic growth and attract businesses to the state.

Remote Sales Tax Collection: In 2019, the West Virginia Legislature passed a law that requires remote sellers to collect and remit sales tax on sales made to customers in the state. The law applies to businesses that do not have a physical presence in West Virginia but have at least $100,000 in sales or 200 transactions.

Property Tax Reform: In 2019, the West Virginia Legislature passed a law that increases the state’s homestead exemption from $20,000 to $25,000. The law also lowers the assessed value of owner-occupied property by 3%. The changes were aimed at providing relief to homeowners and making the state more attractive to retirees.

West Virginia State Tax Incentives

West Virginia offers several tax incentives to businesses and individuals to encourage economic growth and development. Some of the notable tax incentives include:

Tax Credits: West Virginia offers several tax credits to businesses that meet certain criteria. Some of the tax credits include the Business Investment and Jobs Expansion Credit, the Manufacturing Investment Tax Credit, and the Neighborhood Investment Program Credit.

Tax Exemptions: West Virginia offers several tax exemptions to individuals and businesses. Some of the exemptions include the Sales Tax Exemption for Manufacturing, Mining, and Processing Equipment, the Property Tax Exemption for Renewable Energy Resources, and the Sales Tax Exemption for Research and Development Equipment.

Tax Increment Financing: West Virginia’s Tax Increment Financing (TIF) program allows communities to attract and retain businesses by providing public financing for infrastructure improvements. The program allows participating communities to use the increased property tax revenue generated by the development to repay the financing.

Conclusion

West Virginia’s tax system continues to evolve to keep pace with changing economic conditions and the needs of its citizens. The state’s low tax burden, combined with its scenic beauty and unique culture, makes it an attractive destination for businesses and retirees. The state’s tax incentives and recent tax reforms have helped to spur economic growth and development, and it will be interesting to see how West Virginia’s tax system continues to evolve in the coming years.


The total tax burden in West Virginia, when accounting for state and local taxation, totals 9.4%, which is slightly below the national average of 9.8%.  There are sales taxes as well as relatively low property taxes.

West Virginia state sales tax – 6%, with prescription drugs exempt.  Food is taxed at 3%, but there is a discount card available for individuals over 65.

West Virginia personal income tax

There are five tax brackets:

– 3 percent on the first $10,000 of taxable income.

– 4 percent on taxable income between $10,001 and $25,000.

– 4.5 percent on taxable income between $25,001 and $40,000.

– 6 percent on taxable income between $40,001 and $60,000.

– 6.5 percent on taxable income of $60,001 and above.

West Virginia excise taxes

Taxes will be assessed on vehicles, alcohol, tobacco, gasoline and are in addition to federal excise taxes.

– $.55 per package of 20 cigarettes

– $1.85/gallon on spirits

– $1 per gallon on table wine

– $.18 per gallon of beer

– $.322/gallon on gasoline

West Virginia estate/inheritance tax

Only federal laws are in effect.  Estate laws have not been enforceable on deaths occurring after Jan 1, 2005.  There is no West Virginia inheritance tax.

West Virginia payroll taxes

Tax withholding is by formula, unless a supplemental rate is necessary due to a lack of employer withholding from regular wages.

– 3% of annual income less than $10,000

– 4% of annual income between $10,000 and  $25,000

– 4.5% of annual income between $25,000 and $40,000

– 6% of annual income between $40,000 and $60,000

– 6.5% of annual income above $60,000

State Disability Insurance – none

State Unemployment Insurance – 1.5% to 8.5%, wage base is $12,000.  New employer contribution, is 2.70%.  Foreign construction employers use 7.5%.  If liability exceeds $110,000, then SUI must be remitted electronically.

State minimum wage follows federal minimum wage

West Virginia state property tax

Property taxes in West Virginia are collected locally and paid to the country sheriff’s office.  These tax rates reflect levies from the state and county governments as well as school districts.  Additional taxes collected include hotel occupancy taxes and gross receipt taxes.  Property is assessed every three years, no later than July 1 on the year of assessment.  The education tax rate on properties is set by the state legislature.  Both real and intangible property is taxed.

West Virginia state corporate tax

There is a flat tax of 8.5% on all corporate income.

Exemptions

$2,000 of civil and state pensions is exempt from taxation.  There are additional exemptions of $8,000 on out of state pensions, $2,000 on the West Virginia Teacher’s Retirement System, and $8,000 on retirement income.  The exemption is $16,000 on retirement income for married couples over 65.

Those without employers and are not self-employed may deduct 33.4% of expenses related to medical insurance.
The first $2,000 of military retirement pay is exempt from taxation.  Disability payments are generally exempt from West Virginia state taxes.