West Virginia House Passes Bill to Phase Out Social Security Income Tax Amid Ongoing Cuts

West Virginia lawmakers have given their approval to a bill aimed at gradually eliminating the state income tax levied on Social Security benefits. The initiative, introduced by Republican Governor Jim Justice in his annual budget proposal last January, gained traction with its recent passage in the West Virginia House of Delegates on Thursday.

This move is part of a broader strategy to enact tax reductions in the state. Notably, in 2023, West Virginia witnessed its largest tax cut in history, with state income tax rates slashed by over 20 percent. While some laud the recent proposal to reduce taxes on Social Security benefits as a positive step, concerns have been raised about its potential impact on the state’s fiscal health.

In 2019, West Virginia initiated the gradual elimination of income tax on Social Security benefits, initially targeting single filers with incomes below $50,000 and joint filers with incomes below $100,000. The state implemented a 35 percent exemption on benefits for eligible taxpayers in 2020, a figure that increased to 65 percent in 2021, ultimately reaching 100 percent in 2022.

Senate Bill 458 (House Bill 4880) seeks to expand the exemption to all Social Security recipients, irrespective of their annual earnings. The proposed changes, if passed, will be phased in over three years, with a 35 percent reduction in taxes retroactive to January 1 this year, followed by a 65 percent reduction in 2025, and complete elimination in 2026.

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West Virginia Advances Social Security Tax Cut Bill

west-virginia-house-passes-bill-phase-out-social-security-income-cuts
West Virginia lawmakers have given their approval to a bill aimed at gradually eliminating the state income tax levied on Social Security benefits.

While the proposal is not yet law, having cleared the House, it will now proceed to the Senate for further consideration. Governor Jim Justice, who initially aimed for the complete elimination of Social Security taxes this year, has not commented on the version approved by the House.

Republican delegate Larry Kump emphasized the urgency of removing state-level taxes on Social Security benefits, stating, “This issue regarding taxation on Social Security or any pension or retirement program really grinds my gears, gives me legislative heartburn.” Kump expressed gratitude for addressing the longstanding taxation issue on Social Security.

Tom Hunter, spokesperson for AARP West Virginia, which advocates for the interests of senior citizens, asserted, “Taxing Social Security undermines the purpose of Social Security.” Hunter views this proposal as a positive step in aligning with the original intent of the program, designed to uplift seniors out of poverty rather than fund state governments.

The estimated cost of the tax cut is projected to be around $37 million in both 2025 and 2026, impacting over 50,000 households, according to the Associated Press. Kelly Allen, the Executive Director of the West Virginia Center on Budget and Policy, expressed concerns over the ongoing efforts to erode personal income tax, emphasizing potential repercussions on meeting the needs of seniors, children, and families across the state. In January, Allen had already voiced apprehension about additional tax cuts, labeling them as potentially irresponsible amidst uncertainties about the full impact of the previous year’s tax packages.

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