The Importance of Year-End Tax Planning for West Virginia Residents

As the year draws to a close, most West Virginians are thinking about the holidays, not their taxes. But before the ball drops in Charleston, it’s worth taking a few hours to look at your finances.

Year-end tax planning can help you save hundreds—or even thousands—of dollars by making smart financial decisions before December 31. Once the new year begins, many of the best opportunities to reduce your taxes are gone.

Here’s how thoughtful, local-focused planning can make a real difference for West Virginia taxpayers.

What Is Year-End Tax Planning?

Year-end tax planning is the process of reviewing your income, deductions, and credits before the end of the tax year to find ways to reduce what you owe—both federally and at the state level.

The goal is simple:

• Pay only what you legally owe

• Take advantage of every available deduction and credit

• Position yourself for a better financial year ahead

Why Year-End Planning Matters in West Virginia

West Virginia’s tax system has its own unique deductions, credits, and filing quirks that can make a meaningful impact. By being proactive, you can:

• Avoid penalties from underpayment or withholding errors

• Lower your state and federal tax liability

• Maximize benefits tied to family income, home ownership, or retirement

Unlike federal tax changes that grab headlines, WV credits and exemptions are often overlooked—but they can add up fast.

Key Federal Moves to Make Before December 31

Even though WV follows federal AGI (Adjusted Gross Income), your federal actions directly affect your state taxes. Focus on these before the year ends:

1. Maximize Retirement Contributions

Contribute to:

• 401(k): Up to $23,000 for 2025 ($30,500 if 50+)

• Traditional IRA: Up to $7,000 ($8,000 if 50+)

• HSA: $4,150 individual / $8,300 family

These reduce federal AGI, which in turn lowers your WV taxable income.

2. Charitable Contributions

If you itemize, donations to qualified charities are deductible. Many WV residents support local nonprofits—like churches, youth programs, or volunteer fire departments—that qualify under IRS rules.

💡 Tip: West Virginia allows the Neighborhood Investment Program (NIP) Tax Credit, offering a 50% state tax credit for donations to approved charities. These credits are limited and highly sought after, so act early.

3. Harvest Capital Losses and Manage Gains

Sell underperforming investments to offset capital gains and reduce taxable income.If you’ve realized large gains this year, consider deferring sales or pairing them with losses.

4. Check Your Withholding and Estimated Payments

If your income changed in 2025, you might owe more than expected in both federal and WV tax. Use your latest pay stub or Form 1040-ES worksheet to ensure you’ve paid in enough to avoid penalties.

West Virginia-Specific Tax Opportunities

Let’s look at state-specific deductions and credits available to WV residents:

1. Homestead Exemption

If you’re 65 or older, or permanently and totally disabled, and own and occupy your WV home, you may qualify for the Homestead Property Tax Exemption.This exempts $20,000 of assessed value from county property taxes—often saving hundreds per year.Apply with your county assessor before December 1 to qualify for the next tax year.

2. Family Tax Credit

The WV Family Tax Credit helps low- to moderate-income families offset the burden of state taxes.Eligibility depends on federal adjusted gross income and family size. This credit can effectively reduce or even eliminate your WV income tax liability if you qualify.

3. Social Security and Retirement Income Exclusions

West Virginia gradually phased out taxation of Social Security benefits, meaning most retirees now pay no WV income tax on those benefits.

Additionally, you may be eligible for up to $8,000 ($16,000 for joint filers) in retirement income exclusions for pensions and annuities.

Year-end is the perfect time to project total retirement income and plan any IRA withdrawals or conversions before hitting higher brackets.

4. Adoption and Child Credits

West Virginia mirrors many federal child credits and allows certain adoption expense deductions.If you’ve finalized an adoption or added dependents this year, confirm eligibility before filing season.

5. Energy Efficiency and Solar Credits

If you’ve installed solar panels, energy-efficient windows, or heat pumps this year, you may qualify for both federal and WV energy credits.The state’s solar energy systems credit can offset up to 30% of the system’s cost, depending on installation date and program status.

Example: How WV and Federal Strategies Work Together

Example:Maria, a 55-year-old self-employed contractor from Davis, WV:

• Contributes $8,000 to a SEP IRA → saves ~$1,800 in federal + state taxes

• Donates $2,000 to a Neighborhood Investment Program → receives $1,000 WV tax credit

• Prepays $3,000 in property tax → increases itemized deductions

• Updates her Homestead Exemption with the county assessor

Total impact: Over $3,000 in combined savings, plus stronger retirement funding.

The Year-End Tax Planning Checklist

Before December 31:

✅ Review income, deductions, and credits

✅ Max out retirement contributions

✅ Make charitable donations and confirm NIP credit availability

✅ Check eligibility for Homestead or Family Tax Credits

✅ Review energy improvements and home upgrades

✅ Adjust withholding if needed

Final Thoughts

Tax planning isn’t just for business owners or high earners — it’s for every West Virginian who wants to make their money work smarter.

By combining federal strategies with state-specific opportunities, you can reduce your tax burden, strengthen your financial foundation, and start the new year with confidence.

The window for 2025 planning closes on December 31.Don’t wait until April — start now, while you still have time to make a difference.

BONUS:

Download my FREE tax planning checklist below

WV_Year_End_Tax_Planning_Checklist.pdf

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