West Virginia is on the verge of significant tax reform, with the House of Delegates decisively passing legislation to phase out state income taxes on Social Security benefits. The bill, known as HB 4880, secured a groundswell of support, sailing through the voting process with a solid 96-0 margin. It will now reach the state Senate, poised for review and potential enactment.
Building on Past Efforts for Financial Relief
This legislative move is not beginning in a vacuum; it seeks to expand upon a 2019 bill that the governor had signed into law. This previous legislation initiated a trend towards offering tax relief by exempting Social Security income from personal income taxes for most citizens, especially favoring those in the lower tax brackets. The new bill intends to bring this advantage to those in higher tax brackets by continuing with a phased approach.
What Does The Phase-Out Entail
The proposed multi-year phase-out strategy is meticulously structured. It would commence with a 35% reduction, applied retroactively starting January 1, 2024. The relief would then escalate to a 65% decrement the following year, with the target set on a full 100% exemption by 2026. This deliberate phase-out design represents legislators' commitment to a carefully calibrated approach to tax reform, which they anticipate would carry a financial impact to slightly above $37 million.
Tax Relief, A Priority for Elected Officials and Advocates
The refrain among elected officials, like Delegate Larry Kump, is one of urgency mixed with frustration. Kump, a Republican from Berkeley, has been vocal about his impelling desire to address the taxation on Social Security and other retirement benefits. The protracted deliberations on this matter have spurred an almost visceral need for resolution among the state's decision-makers.
Kump's sentiment that securing partial relief progressively over the coming years is more advantageous than inaction resonates as a pragmatic yet resolute stance on moving forward. His vivid phrasing that this incremental progress is "certainly better than a poke in the eye with a pointy object." underscores his advocacy for immediate albeit gradual change.
ALSO READ: From Retirement Accounts to HSAs: 15 Legal Strategies to Significantly Decrease Your Taxable Income
AARP Advocates for Measured Reform Approach
The AARP has been a staunch advocate for eliminating these state income taxes on Social Security benefits. Gaylene Miller, the state director for AARP West Virginia, relayed the organization's endorsement of the moderated phase-out approach. Drawing parallels to the original exemption law, Miller asserted the group's understanding and acceptance of the gradual path toward relief. She assured that the advocacy group will continue to support and navigate the chosen route alongside the Legislature.
Forward Momentum into the State Senate
As HB 4880 heads to the Senate, the push for financial relief for West Virginians reaches a new peak. The anticipation of a total exemption by 2026 marks a dedication to staying in step with adjacent states that do not levy taxes on Social Security benefits but also lead in tax policy. Having achieved a full consensus in the House of Delegates, the forthcoming discussions and decisions in the Senate will be integral to shaping the financial future of the state's retired population.
RELATED TOPIC: House Bill Proposes Ending Social Security Taxes for Retirees, Extends Program Life by 20 Years
© 2023 Lawyer Herald All rights reserved. Do not reproduce without permission.
Get the Most Popular Lawyerherald Stories in a Weekly Newsletter
Join the Discussion
