West Virginia 2026 Tax Changes — What Residents & Business Owners Must Know
On January 1, 2026, major federal tax changes will take effect as several provisions of the Tax Cuts and Jobs Act expire and new rules continue under the One Big Beautiful Bill Act (OBBBA).
West Virginia residents — who pay state income tax based on federal AGI — will feel these federal changes immediately.
- W-2 earners in Charleston, Huntington, Morgantown, Parkersburg, Wheeling, Beckley
- Coal, energy, transportation, and labor-sector workers
- Contractors, trades, and small business owners
- Real estate investors and rental property owners
- Short-term rental hosts
- Families with children
- Retirees drawing taxable income
- Dual-income households
- Agricultural and rural families
Below is a detailed breakdown of how 2026 impacts West Virginians.
Key 2026 Federal Changes Affecting West Virginia
Standard Deduction Shrinks
The expanded standard deduction under TCJA expires in 2026.
OBBBA does not extend this feature.
- Single: ~$8,300
- Married Filing Jointly: ~$16,600
- Head of Household: ~$12,400
Because West Virginia uses federal AGI as the starting point, this increase in federal taxable income also raises West Virginia state taxable income.
Federal Income Tax Brackets Increase
- 12% → 15%
- 22% → 28%
- 24% → 31%
- dual-income families
- coal, energy, and trades workers
- teachers and state employees
- healthcare and manufacturing workers
- households earning $50K–$200K
Higher brackets significantly increase both federal and WV state tax burdens.
QBI Deduction Made Permanent Under OBBBA
OBBBA permanently preserved the 20% Qualified Business Income (QBI) deduction.
- LLCs
- S-Corps
- sole proprietors
- contractors and trades
- certain rental operations
- freelancers and gig workers
- updated income thresholds
- revised SSTB phaseout rules
- stricter documentation requirements
West Virginia does not apply a state-level QBI deduction.
Child Tax Credit Shrinks
- The federal Child Tax Credit decreases from about $2,000
- To roughly $1,000 per child
- Refundability decreases
Families across West Virginia — especially in rural counties and metro areas — will see smaller refunds.
Marriage Penalty Returns
- married couples reach higher federal brackets sooner
- credits phase out earlier
- combined incomes push AGI upward
Because West Virginia uses federal AGI as its baseline, state tax owed increases as well.
Dual-income WV families will feel this more than most.
West Virginia–Specific Tax Considerations
1. West Virginia Uses Federal AGI for State Taxation
The state’s income tax system begins with federal AGI.
- reduced federal deductions
- increased federal taxable income
- lower federal credits
…all increase West Virginia state taxable income.
Residents at nearly all income levels will experience higher combined liabilities.
2. Coal, Energy, and Labor-Sector Workers Are Significantly Affected
- coal
- mining
- natural gas
- energy production
- transportation
- logistics
- trades
These industries often involve overtime, bonuses, hazard differentials, or variable income — all of which will be taxed more heavily under the 2026 brackets.
3. Real Estate Investors & Landlords Will See New Federal Impacts
- Morgantown
- Charleston
- Huntington
- Martinsburg
- Eastern Panhandle regions
- capital gains
- depreciation
- recapture
- rental loss limitations
- STR participation and documentation
- timing of property sales and refinances
Rising home prices in certain markets increase exposure.
4. STR Owners Must Prepare for Updated Federal Rules
Short-term rental activity is common near:
- Morgantown
- Charleston
- New River Gorge tourism region
- Ski and mountain destinations
- reduced bonus depreciation
- stricter participation requirements
- updated IRS safe harbor rules
- enhanced documentation standards
5. Retirement Income Planning Still Matters
- IRA withdrawals
- 401(k) distributions
- pension income
- some investment income
Federal bracket increases raise the tax cost of retirement withdrawals and investment income, even though some state exemptions may apply.
Who Is Most Affected in West Virginia (2026)
- Dual-income households
- Coal, energy, and labor-sector workers
- Contractors and small business owners
- Real estate investors and landlords
- STR operators
- Families with children
- Retirees drawing taxable income
- Rural and agricultural households
- Middle-income earners
What West Virginia Residents Should Do Before December 31, 2025
- Review federal and state withholding
- Maximize retirement contributions
- Consider Roth conversions
- Review QBI eligibility and business structure
- Maintain STR and rental documentation
- Evaluate capital gains exposure
- Plan timing for property or equipment purchases
- Build a coordinated federal + West Virginia tax strategy
West Virginia 2026 Tax FAQ
Does West Virginia conform to QBI?
No. QBI is federal-only.
Will West Virginia taxes rise?
State tax rates are unchanged, but taxable income rises due to federal changes.
Are families affected?
Yes. Reduced credits and higher taxable income lower refunds.
Are STR owners impacted?
Yes. STR depreciation and participation rules tighten in 2026.
Are retirees affected?
Yes. Federal bracket increases raise the cost of withdrawals.
Get your 2026 West Virginia Tax Strategy
Higher taxable income, stricter rental property rules, reduced credits, and updated business regulations make early planning essential.