Does West Virginia Tax Retirement Income?
Discover West Virginia's rules for taxing retirement income. While some income is taxed, state-specific deductions can often reduce or eliminate the amount owed.
West Virginia taxes certain retirement income, but it also provides deductions and exemptions that can lower or eliminate the tax liability for many retirees. The state’s approach involves conforming to federal tax rules for some income sources while offering unique subtractions for others. While income from pensions, 401(k)s, and IRAs is generally taxable, specific state-level deductions can reduce the amount of income subject to tax. The overall tax picture for a retiree depends on the types and amounts of their retirement income.
Tax Treatment of Social Security Benefits
West Virginia is phasing out its tax on Social Security benefits. Taxpayers with a federal adjusted gross income below $50,000 (or $100,000 for married couples filing jointly) can already fully deduct their federally taxable Social Security benefits. For those with incomes above these thresholds, the state is eliminating the tax in stages.
For the 2025 tax year, 65% of the federally taxable portion of Social Security benefits can be subtracted from West Virginia income. This will increase to 100% for tax years 2026 and beyond, at which point Social Security will no longer be taxed in the state, regardless of income.
The amount of Social Security subject to federal tax, and therefore considered for the West Virginia subtraction, depends on a taxpayer’s “provisional income.” This figure is calculated by taking your Adjusted Gross Income (AGI), adding nontaxable interest, and then adding 50% of your total Social Security benefits.
Deductible Retirement Income Sources
Beyond Social Security, West Virginia offers a deduction for other types of retirement income for taxpayers who are age 65 or older or are permanently and totally disabled. These individuals can deduct up to $8,000 of income from their federal adjusted gross income. If married and both spouses qualify, they can each claim the deduction for a total of up to $16,000. However, the $8,000 deduction is reduced by the amount of any Social Security or other public pension subtractions claimed by the taxpayer.
The $8,000 deduction can be applied to income from:
- Private employer pensions
- Government pensions
- 401(k) plans
- Traditional IRAs
- Other qualified retirement accounts
A deduction of up to $2,000 is available for benefits from the West Virginia Teachers’ Retirement System, the West Virginia Public Employees’ Retirement System, and certain federal retirement systems. Retirement income from certain West Virginia state and local police, deputy sheriff, and firefighter retirement systems is fully exempt from state tax.
Military and Railroad Retirement
West Virginia provides favorable tax treatment for military retirement pay. All military retirement income, including payments from the regular Armed Forces, Reserves, and National Guard, is fully exempt from state income tax. This complete exemption also extends to survivorship annuities related to military retirement.
Similarly, all benefits administered by the U.S. Railroad Retirement Board are fully exempt from West Virginia income tax. This includes Tier 1 and Tier 2 benefits, as well as any unemployment, disability, and sick pay included in a recipient’s federal return. Taxpayers receiving these benefits can subtract the full amount from their West Virginia income.
How to Claim the Retirement Income Deduction
To claim the retirement income deductions, taxpayers must complete and file West Virginia Schedule M, “Modifications to Federal Adjusted Gross Income,” with their annual state income tax return, Form IT-140. This form is the central document for reporting all additions and subtractions to income as defined by state law.
When completing the form, the general retirement income deduction for those age 65 or older is claimed in the “Modifications Decreasing Federal Adjusted Gross Income” section. You would enter the qualifying income, up to the $8,000 limit per person, on the line designated for the senior citizen/disability modification.
For military retirees, the full amount of their federally taxed military retirement pay is entered on the specific line for the Military Retirement Modification. Likewise, Railroad Retirement benefits are subtracted on their own dedicated line. For those claiming the smaller $2,000 deduction for West Virginia public or federal pensions, there are separate lines to enter these amounts.