CHARLESTON, W.Va. — Starting in the 2020 tax year, most citizens across West Virginia will begin to see an elimination on their social security tax.
This is after Governor Jim Justice signed House Bill 2001, which exempts Social Security benefits from personal income taxes in a three-year phase-in, into law on Wednesday.
AARP West Virginia President Rich Stonestreet is happy the bill is now law, as he said Thursday this has been a legislative priority for quite some time and the underlying issue was having to pay taxes twice.
“Most folks object to paying taxes twice,” Stonestreet said. “You work and you have social security taken out of your paycheck and what is taxed is the total amount of your gross salary, not is what is left over after the deduction of the social security.”
Starting with a person’s 2019 taxes, the tax will be eliminated by 35 percent in the first year, increasing to 65 percent the following year and to the full 100 percent in the third year.
Stonestreet said it is important for individuals to start preparing for this by looking at the most recent federal income tax return.
“See how much of his or her salary is taxable for federal purposes,” he said. “That is what you’re starting with and presently that is the same amount for the state.”
The law will qualify for all West Virginians unless they are in higher income tax brackets.
During the legislative process, the bill was amended with a cap. The deduction is only allowed for a married couple filing a joint return, not over $100,000, or $50,000 for single individuals or a married individual filing a separate return.
House Speaker Roger Hanshaw said on Thursday’s MetroNews “Talkline” that the elimination of the tax for almost all West Virginians was a shared objective for almost every member of the legislature this session.
“There will be a segment of the very highest income earners in our state that will be receiving social security benefits that won’t get the benefits of this year’s bill,” Hanshaw said. “It doesn’t mean they won’t in the future. For the purposes of this year’s bill, we are happy to declare victory and say that we’ve eliminated the tax on social security for almost all West Virginians.”
“Eliminating the tax on social security for the majority of our residents was a priority for both political parties and both houses in the legislature this year. In years past too, but we were finally able to get it over the line this year.”
West Virginia was one of only three states in the country to tax social security to the same extent as federal tax as Stonestreet said the state was an “outlier” in this regard. He added that all of the surrounding states to West Virginia have income tax but do not tax social security benefits.
Stonestreet believes that this tax cut will be a boost for the state’s economy as well.
“This is money they can put back into the economy,” he said. “Instead of paying taxes they can use that money to purchase eggs. We believe this could help the economy.”