West Virginia‘s tax system ranks 23rd overall on the 2025 State Tax Competitiveness Index. West Virginia ranks near the middle of the pack on the Index, with some competitive elements and others that could use improvement. The Mountain State has recently reduced its individual income tax rate, and further reductions are slated to take effect in 2025. Additionally, West Virginia has a 6.5 percent corporate income tax rate, which is higher than the national average. In the future, if the state chooses to forgo distortive tax credits for jobs, R&D, and investments, a lower tax rate on all corporate income could be achieved. West Virginia does benefit, however, by conforming to the federal bonus depreciation allowance under Section 168(k) and the federal treatment of net operating losses (NOLs).
West Virginia has a relatively competitive sales tax rate and a low effective property tax rate on owner-occupied housing. However, West Virginia’s taxes on tangible personal property create distortions, especially its harmful taxes on business inventory. Furthermore, West Virginia recently implemented split roll treatment of property, introducing nonneutrality into the tax code by encouraging investment in certain classes of property over others. Under a split roll system, classes of property can be pitted against each other, changing incentives to own or invest in different kinds of property, and allowing local policymakers to ratchet up tax burdens without being seen as raising taxes on homeowners. Some West Virginia localities also impose gross receipts taxes, called Business & Occupation taxes.
| Category | Rank | Rank Change | Score |
|---|---|---|---|
| Overall | 23 | 2 | 5.17 |
| Corporate Taxes | 26 | 2 | 5.25 |
| Individual Income Taxes | 29 | 3 | 5.23 |
| Sales Taxes | 19 | -1 | 4.92 |
| Property Taxes | 17 | -6 | 5.31 |
| Unemployment Insurance Taxes | 23 | 6 | 5.17 |
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