West Virginia lawmakers have approved a bill that would phase out state income taxes on Social Security benefits.
Republican Gov. Jim Justice announced in January that he wanted to eliminate all state-imposed Social Security taxes in his annual budget proposal. The plan was passed by the West Virginia House of Delegates on Thursday, taking another step toward becoming law.
This is part of a broader series of tax cuts enacted in West Virginia. The state’s income tax rate will be cut by more than 20% in 2023, making it the largest tax cut in West Virginia history, officials said. While some have hailed the latest proposed cuts to social security benefits as a “step in the right direction”, others have expressed concern about the impact on the national budget.
In 2019, West Virginia enacted legislation to begin phasing out income taxes on Social Security benefits for single filers with incomes of less than $50,000 and $100,000 for joint filers. The state waived 35 percent of benefits for eligible taxpayers starting in 2020. This he rose to 65% as of 2021 and in 2022 he reached 100%.
If passed, Senate Bill 458 (House Bill 4880) would expand the exemption to all Social Security recipients, regardless of annual income. This will also be phased in over three years, with a 35% tax cut this year, retroactive to January 1, a 65% tax cut in 2025, and a complete repeal in 2026.
The proposal has not yet become law and will be passed by the House of Representatives before being sent to the Senate. The attorney general initially aimed to completely eliminate Social Security taxes this year, but has not yet commented on the version passed by the House of Representatives, the Associated Press reported. newsweek contacted Justice via email outside of normal business hours.
Republican Representative Larry Kump suggested it’s time to remove state-level taxes from state Social Security benefits. “This issue of taxing Social Security, pensions and retirement plans is really frustrating, and it’s giving me a lot of legislative heartburn,” he said, according to the Associated Press. “We have been mocking the issue of taxing Social Security for years, and we are grateful to be working on this issue further.”
“Taxing Social Security defeats the purpose of Social Security,” Tom Hunter, a spokesman for AARP West Virginia, which supports benefits for seniors, told West Virginia Watch in January. “This was a program aimed at lifting seniors out of poverty, not a program aimed at funding state governments. So we think this is a step in the right direction. I believe.”
The tax cuts are expected to cost about $37 million in both 2025 and 2026 and affect more than 50,000 households, according to the Associated Press.
“Continued efforts to erode and eliminate the personal income tax will undermine our state’s ability to meet the needs of seniors, children, and families across the state,” Kelly Allen, executive director of the West Virginia Budget and Policy Center, said in a statement Thursday. “
In January, he expressed concerns about the governor’s overall budget proposal and the impact additional tax cuts would have on the budget.
“I think it’s frankly irresponsible to consider further revenue cuts when we still don’t see the full impact of last year’s tax actions,” Allen said, as reported by West Virginia Watch.
rare knowledge
Newsweek is committed to challenging conventional wisdom, finding common ground and finding connections.
Newsweek is committed to challenging conventional wisdom, finding common ground and finding connections.