West Virginia, with its friendly people, small cities, towns, and rural areas provides a relaxed setting for retirement. The state’s beautiful geography, with the Appalachian Mountains, bountiful lakes, streams and rivers provide ample opportunities for outdoor recreation. West Virginia generally has warm summers and cool winters, with an average statewide temperature of 72 degrees in July and 32 degrees in January, but the climate can vary considerably among the different areas of the state.
According to the Retire in West Virginia organization the state has a population density 12.8% lower than the national average. But West Virginia is still conveniently located, within a day’s drive of the large Northeastern population centers.
The low comparative cost of living is another attraction for retirees. The Retire in West Virginia organization points out a study showing that the cost of living in the state was 23 percent lower than in the Northeastern United States. TopRetirements.com reports that the cost of living index in Morgantown is 89 on a national index of 100, and 80 in the Charleston area. And property taxes in West Virginia are among the lowest in the country. According to the Tax Foundation, property taxes in West Virginia were just 0.48% of median home value in 2008, placing the state 45th among the 50 states.
West Virginia property taxes
Property taxes in West Virginia are administered by the counties and each county and municipality imposes its own rates. The rate charged by each county board of education is set by the state legislature, but there may be differences between county boards due to excess levies. Property is assessed at 60% of the fair market value and the tax, which is a combination of state, county, school and municipal taxes, is expressed as an amount per each $100 of assessed property value.
Homeowners age 65 or older and persons who are permanently and totally disabled can qualify for a $20,000 homestead exemption on the home they occupy as their residence. The homeowner must be a resident of West Virginia for at least two consecutive years before qualifying for the homestead exemption.
West Virginia income tax
West Virginia has a state income tax with progressive rates from 3.0% on the first $10,000 of taxable income up to 6.5% on taxable income over $60,000 for taxpayers filing as single, head of household, widow(er) with dependent child, and married filing jointly. For married taxpayers filing separately, the rates are the same but the income amounts are halved.
The West Virginia state income tax return starts with the federal adjusted gross income. Then certain additions and subtractions are made to determine West Virginia adjusted gross income. Taxpayers age 65 or older and persons who are permanently and totally disabled can deduct up to $8,000 of income from any source, including retirement income. On a joint return both spouses can deduct up to $8,000 of each individual’s income.
There is a $2,000 exemption for each personal exemption claimed on the federal income tax return. There is no standard deduction or itemized deductions on the West Virginia state income tax return. Social security income is taxable in West Virginia only to the extent it is taxable on the federal return. Up to $2,000 in civil and state pensions and military retirement pay is exempt from West Virginia state income tax. There is a partial exclusion of military retirement pay over $2,000, up to a maximum exclusion of $20,000.
Seniors in West Virginia who qualify for the homestead exemption for property tax purposes are eligible for a refundable state income tax credit if their household income is below a certain amount. In 2008 the income limit was federal adjusted gross income of $15,600 or less for a household of one person, with an additional $5,400 for each additional member of the household. This senior citizens tax credit is the amount of property taxes paid on up to the first $10,000 of assessed value over the $20,000 homestead exemption.
There is also a homestead excess property tax credit, which is the amount of property taxes paid in excess of 4% of the taxpayer’s income, up to a maximum tax credit of $1,000. These two credits – the Senior Citizen Tax Credit for Property Tax Paid and the Homestead Excess Property Tax Credit – have to be compared and the more advantageous credit can be claimed.
West Virginia sales tax
West Virginia has a 6% sales tax that applies on all sales of goods and services unless specifically exempt. Prescription drugs are exempt and food is taxed at 3%. But the reduced rate on food does not apply to prepared food, such as in a restaurant, food sold through vending machines and soft drinks. These are subject to the 6% rate.
Professional services, personal services such as barbers and beauticians and capital improvements to real property are not taxed. There is an equivalent 6% use tax on tangible personal property brought into West Virginia from outside the state, except for food, which would be 3%. When title to a motor vehicle is obtained in West Virginia, there is a 5% sales tax based on the sale price of the vehicle, whether it was purchased in or outside West Virginia. There are no municipal sales taxes in West Virginia.
Senior residents of West Virginia who are 60 and older are eligible for the Golden Mountaineer Discount Card that they can use for discounts at pharmacies, retail establishments and for professional services. This card is free and there are no income restrictions.
West Virginia inheritance and estate tax
West Virginia does not impose an inheritance or transfer tax. The state does impose an “estate pick-up tax”, which is equal to the amount of the state tax credit that can be claimed on the federal estate tax return. Since there is no federal credit for state death taxes for deaths occurring on or after January 1, 2005, there is no West Virginia estate tax. Changes in the federal estate tax law in the future could affect the West Virginia estate tax.
Golden Mountaineer Card Application – West Virginia Bureau of Senior Services
Kay Bell, “State Taxes: West Virginia” – Bankrate.com
Property Taxes on Owner-Occupied Housing by State, 2004 – 2008 – Tax Foundation
Retire – West Virginia
Retire in West Virginia – active adult communities – TopRetirements.com
Summary of Tax Responsibilities of West Virginia Residents – West Virginia State Tax Department
West Virginia – Taxes by State – Retirement Living Information Center
West Virginia Personal Income Tax Forms and Instructions – West Virginia Department of Revenue