West Virginia State Taxes: Everything You Need to Know
As with any other state, the tax code in West Virginia is complex and multifaceted. Residents of the Mountain State pay income taxes, as well as sales and property taxes. Their overall tax burden puts them in the middle of the pack in terms of U.S. states, despite having some of the lowest property taxes in the country. The revenues collected from West Virginia taxpayers fund the state’s operations. Although the laws and rates vary from year to year, residents can expect to pay some or all of the following taxes.
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West Virginia Personal Income Taxes
Income tax is a tax on any income you earn from all sources in a calendar year. You’re required to file tax returns with both the federal and your state governments to determine your obligations. Tax revenues are used to fund government programs and services.
Like most employees in the U.S., workers in West Virginia typically have income taxes taken directly out of their pay. Self-employed individuals and business owners must calculate and pay their income taxes themselves.
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In addition to federal income taxes and Federal Insurance Contributions Act (FICA) taxes (their contributions to Social Security and Medicare), West Virginians pay state income taxes on their earnings. These taxes are levied on a progressive scale based on income, and range from 3% to 6.5%. More specifically, the brackets break down as follows:
|Tax Rate||Adjusted Taxable Income Range|
|4%||Between $10,001 and $25,000|
|4.5%||Between $25,001 and $40,000|
|6%||Between $40,001 and $60,000|
|6.5%||$60,001 and above|
The actual amount West Virginians owe in income taxes depends on their total taxable earnings and the applicable federal tax bracket, as well as any deductions and credits they take. If the tax withholdings from their paychecks exceed their total obligation, they receive a refund. If they haven’t had enough withheld (or they are self-employed) they owe the state the difference.
In terms of state income taxes, taxable income is based on federal adjusted gross income, plus or minus certain applicable modifications. Some of the additions include specific types of interest and pension payments. Deductions include certain retirement benefits, contributions to medical and college savings accounts, income tax refunds, and even some qualifying tolls paid on West Virginia highways.
The state also grants you $2,000 per exemption, or $500 if you claim zero exemptions, from taxable income.
Senior citizens over age 65 and disabled individuals also receive a special modification of $8,000 per individual. In other words, a married couple, ages 67 and 68, will have at least $20,000 exempted from state income tax ($8,000 each for the modification, and $2,000 for each exemption.) That couple will only need to file state income taxes if their income exceeds $20,000.
West Virginia also has reciprocity agreements with neighboring states (Ohio, Pennsylvania, Maryland, Virginia, and Kentucky). This means that if you are a resident of one of those states, but earn wages from an employer in West Virginia, you only need to pay income taxes to your home state. You will still need to file a tax return in West Virginia to report your income, but you will not be subject to additional income taxes.
Residents of West Virginia are not subject to any local income taxes.
West Virginia Sales Tax
West Virginia’s statewide sales tax is 6%. Although none of the state’s counties have their own sales taxes, many municipalities (including the largest cities of Charleston, Martinsburg, and Wheeling) impose an additional local tax of 0.5% to 1% on purchases that aren’t specifically exempted from sales taxes.
Types of items exempt from sales taxes include groceries, prescriptions, medical equipment, required textbooks, and purchases made with food stamps. Many personal services, including manicures and massages, are also exempt from sales tax.
West Virginia also levies a use tax on items that you purchase outside of the state but use or store within its borders. In the simplest terms, if you would have been required to pay sales tax on an item had you purchased it in West Virginia, but you did not, then you need to file and pay a state use tax. The state defines several categories that may be subject to use taxes, including magazine subscriptions, online or mail order purchases, or purchases made out of state.
To better understand the use tax, assume you made an online purchase of $1,000. The vendor did not charge sales tax. Under WV law, you’re required to report that purchase when you file your annual state tax return and pay a 6% sales tax, or $60.
However, if the online vendor charged you WV sales tax, you do not have to claim that purchase. In addition, if you make a purchase in another state and pay sales tax to that state, you can deduct the amount you already paid from your WV sales tax due. If the amount you paid to another state meets or exceeds the WV rate, then you don’t need to claim the purchase on your tax return.
West Virginia Personal and Real Property Taxes
West Virginia levies taxes on all real and personal property owned by residents, collecting about $1.6 billion each year. However, the state does have some of the lowest property taxes in the country, as well as some of the lowest property values.
Property tax rates in West Virginia vary by municipality, but the average effective tax rate is 0.54%. The taxes are charged on 60% of the appraised value of a property. In other words, if a property is appraised at $200,000, the taxes will be levied on $120,000 of value. The state divides properties into four classes. Most individuals pay property taxes on Class II properties, which include residential property and farm real estate. If you are over age 65 or disabled, you qualify for a Homestead Exemption of $20,000.
There are no taxes on Class I property (land, structures, and equipment used for agriculture), whereas Class III and IV properties are business properties and all the land, structures, and equipment are taxed. The tax rates are determined by schools, counties, cities, and the state, with a maximum combined levy of $1 per $100 of assessed value on Class II properties. The actual tax bill is determined by multiplying the levy rate by the effective tax value of the property.
West Virginia Inheritance and Estate Taxes
Inheritance and estate taxes are taxes levied on the value of property and money passed on after death. An estate tax is a tax on the privilege to pass property to someone else, and is levied before the property transfer. Estate taxes are typically limited to only large estates.
At the federal level, only estates valued at more than $11,580,000 are subject to the tax, whereas only a handful of states have estate taxes on estates valued at anywhere from $1 million to $5 million. In states with inheritance taxes, beneficiaries of property or money passed on after death pay taxes if the value of the inheritance exceeds certain limits.
West Virginia does not have an estate tax. However, residents may still be subject to federal estate taxes if the estate exceeds the federal exemption. The state also does not levy inheritance taxes, and has not since 2005. This means that West Virginia residents who receive an inheritance do not have to pay additional taxes on that money. However, they may be subject to additional taxes, depending on how they use the inheritance. For example, if you inherit property, you’ll be responsible for the property tax if you keep it, or capital gains taxes on the income you receive from selling it.
Other West Virginia Taxes
In addition to income, property, and sales taxes, anyone shopping in West Virginia for alcohol, cigarettes, and gas is subject to additional excise taxes on those purchases.
West Virginia Alcohol Tax
Alcohol sales in West Virginia are controlled by the state, and subject to both the state and local (if applicable) sales and use taxes and an additional wine and liquor distribution tax. The distribution tax of 5% is paid by the retailer, and rolled into the total cost of the alcohol.
West Virginia Cigarette Tax
West Virginians pay an excise tax on tobacco and e-cigarette products. As of 2016, the tax increased to $1.20 per pack of 20 cigarettes, and 12% of the wholesale price of any other tobacco products. E-cigarette (vaping) liquids are taxed at a rate of 7.5 cents per milliliter of liquid.
West Virginia Gas Tax
West Virginia drivers also pay taxes at the gas station. As of 2020, the fuel tax rate is 3.570 cents per gallon of regular or diesel fuel. The state also taxes home heating oil at 1.520 cents per gallon.
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