Social Security Plan Would Phase Out Taxes in West Virginia

Blank U.S. Treasury checks are run through a printer at the U.S. Treasury printing facility in Philadelphia, Pa., on July 18, 2011. (William Thomas Cain/Getty Images)

Lawmakers in West Virginia overwhelmingly passed a bill this week to phase out state taxes on Social Security payments.

In 2019, the Legislature passed a bill cutting the income tax on Social Security benefits for the state’s lowest earners—those making less than $100,000 filing jointly and $50,000 for a single person—over three years.

The GOP-led House of Delegates on Thursday, which is now going to the state Senate, will eliminate the tax for Social Security recipients over a three-year period, cutting the tax by 35 percent per year—65 percent in 2025, and 100 percent in 2026.

The measure overwhelmingly passed 96–0 in the House. However, it would not be able to touch federal taxes on Social Security, as that would likely have to be passed by Congress.

Republican state Delegate Larry Kump argued that other states don’t tax Social Security payments.

“This issue regarding taxation on Social Security or any pension or retirement program really grinds my gears, gives me legislative heartburn,” he said, according to reports. “We’ve been fooling around with this taxation issue on Social Security for many years now, and I’m grateful that we’re going to be doing some more on it.”

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Mr. Kump said he is still concerned about retired state employees and how the higher, inflati0n-driven cost of living is impacting their pension payments. “That’s another issue,” he said. “Let’s go ahead and pass this bill. It’s certainly better than a poke in the eye with a sharp stick. And let’s keep the light on for these people.”

The tax cut would cost around $37 million in both 2025 and 2026 and would impact more than 50,000 households. But the West Virginia Center on Budget and Policy urged caution Thursday, with Executive Director Kelly Allen saying in a statement that “continued efforts to erode and eliminate the personal income tax are undermining our ability to meet the needs of seniors, children and families across our state.”

Eliminating the tax is a key priority for Republican Gov. Jim Justice, who announced it as part of his annual budget proposal during his final State of the State address last month.

It’s unclear if Mr. Justice will approve of the proposal. His version would have eliminated the personal income tax on Social Security this year, retroactive to Jan. 1.

Last year, the governor signed a 21.25 percent income tax reduction into state law, returning more than $750 million to state residents amid a record budget surplus of $1.1 billion.

The tax bill is supported by AARP, a senior advocacy group formerly known as American Association of Retired Persons.

“Taxing Social Security undermines the purpose of Social Security,” Tom Hunter, spokesman for AARP, told West Virginia Watch last month. “This was a program that was designed to lift seniors out of poverty. It wasn’t a program that was designed to fund state governments. So we believe this is a step in the right direction.”

Smaller Payments Likely

In West Virginia and in other states, Social Security recipients will likely get a smaller increase to their checks in 2025 due to lower-than-expected inflation, according to an analyst this month.

According to a policy group, the Senior Citizens League, the 2.9 percent January consumer price index for urban wage earners means the group will be “adjusting the long-term forecast COLA to 1.75 percent in 2025.” The overall consumer price index rose 3.1 percent last month, according to federal data.

“This is the forecast based on data through January 2024 that was released today, and the final COLA for 2025 is likely to be different from the estimates because the COLA is calculated on the average rate of inflation during the 3rd quarter which is compared against the 3rd quarter a year ago,” it said in a Feb. 13 news release. “In other words, there are another eight months of data to come in, and a lot could change.”

The Associated Press contributed to this report.