This US State Will Stop Taxing Social Security In 2026

Many new retirees are unsure whether or not they need to pay taxes on Social Security, and the answer to that question depends heavily on their location. As far as federal taxes are concerned, the Social Security Administration (SSA) states that 85% of Social Security benefits are taxable when a retiree files as an individual and their total income exceeds $25,000; if filing a joint return, this 85% rule is triggered when the spouses have a combined income greater than $32,000. These regulations can especially help people qualifying as lower-class retirees.

When referring to state income taxes, regulations differ. As of 2026, eight states still do tax these benefits under certain circumstances, though that number was actually nine until quite recently. In 2026, retirees in West Virginia will join those in 41 other states no longer required to pay income taxes on their Social Security benefits. Legislators in the Mountain State took a phased approach, passing House Bill 4880 in 2024 with bipartisan support and implementing a 35% tax cut that year. In 2025, the tax break increased to 65% and, in 2026, the state's nearly half a million Social Security recipients will no longer pay state income taxes on their benefits. Couple that with the bigger Social Security checks arriving in January 2026 thanks to the recently increased cost-of-living adjustment, and there's plenty of reason for West Virginian retirees to celebrate.

In an interview with WTOV9 in December 2025, West Virginia Delegate Jonathan Pinson noted how having money previously paid in taxes stay in a retiree's pocket can allow them to pay for a month's grocery bill and otherwise spend money in the area. Highlighting how this change could benefit the state's economy at large, he noted, "For every one dollar that remains local, we see that it generates about a dollar and a half of local economic activity." Meanwhile, CapitalOne Shopping Research reports that those who live in areas where they can access small businesses drive 26% less, reducing money spent on gasoline and multiplying cost savings. Democratic Delegate Sean Hornbuckle shared another way in which this new law can help West Virginia, observing to WTOV9, "When people are looking to make their retirement income go further, taxation is one of the key things that they look at. Now that we are able to compete better, especially with our surrounding states, I think that makes us more of a viable option." As more retirees move into the state, local spending will increase even further.

Although the legislation passed will impact retirees' bank accounts positively, it also reduces the state budget for West Virginia by about $37 million. However, Hornbuckle says this reduction could leave room to further stimulate the economy by incentivizing the state to create more jobs, providing more than just Social Security recipients a reason to move to the state.