Payroll tax in West Virginia: What employers need to know [2024]

Navigating payroll taxes is a crucial aspect of running a business. While the Internal Revenue Service (IRS) governs federal payroll taxes, each state—including West Virginia—has its own set of rules and regulations. This adds a layer of complexity for businesses operating within the Mountain State.

Luckily, West Virginia has a fairly straightforward payroll tax system—making it easier on business owners than some other states, like California or New York. With just two types of state payroll taxes, employers in West Virginia are only responsible for filing and submitting payments for unemployment insurance and income tax to the state (though they’re still responsible for payroll taxes at the federal level, too). Understanding the nuances of each type of tax is essential to ensure compliance and avoid potential penalties.

This article will provide an in-depth look at payroll taxes in West Virginia. Whether you’re a small business or a growing enterprise, you’ll need to know the different types of taxes, their rates, submission processes, and critical due dates. We’ll cover all that and more in this guide.

The 2 West Virginia payroll taxes

In the Mountain State, the West Virginia Tax Division administers payroll taxes, including unemployment insurance (UI) tax and income tax withholding. UI tax is also managed by WorkForce West Virginia.

Employers are responsible for taxes as soon as they start paying wages to their employees. In addition, employers should report all new hires within 14 days of the hire date—you can do this via the West Virginia new hire website.

Each of these taxes has its own rules and rates, which we’ll explore in detail in the following sections. 

Unemployment insurance tax

West Virginia’s unemployment insurance tax exists to provide temporary financial assistance to employees who have lost their jobs. The rate depends on several factors, including the employer's experience rating and the state's unemployment insurance fund balance. Rates can change over time based on the employer’s history and experience.

Here's a breakdown of this tax:

Income tax withholding in West Virginia

In addition to the unemployment insurance tax, employers in West Virginia are also responsible for withholding state income tax from their employees' wages. This process involves deducting a portion of an employee’s income and remitting it directly to the West Virginia State Tax Department. The withholding amount depends on the employee's earnings, tax filing status, and the number of allowances claimed on their Form WV/IT-104.

In March of 2023, West Virginia passed a law that cut income tax rates by an average of 21.25%. The new rate schedule for non-married individuals ranges from 2.36% to $2,183.50 plus 5.12% of income over $60,000. Married individuals filing separate returns owe between 2.36% and $1,091.75 plus 5.12% of income over $30,000.

It's important to note that these rates are subject to change, and employers should refer to the most current withholding tables provided by the West Virginia State Tax Division for accurate calculations. 

Navigating the nuances of payroll taxes in West Virginia can be complex, especially when dealing with multiple tax types. Rippling’s payroll software simplifies this process by offering automatic tax calculations and submissions. It also monitors tax laws at both the federal and state levels to guarantee total compliance. Additionally, Rippling’s PEO service can further streamline your payroll process by registering and maintaining your state tax accounts for you.

Payroll tax due dates in West Virginia

In West Virginia, employers have specific deadlines for remitting payroll taxes to the state. Adherence to these dates is crucial to avoid penalties. 

Unemployment insurance is usually paid quarterly. The due dates generally align with the federal calendar:

• First quarter (January-March): Due April 30
• Second quarter (April-June): Due July 31
• Third quarter (July-September): Due October 31
• Fourth quarter (October-December): Due January 31

On the other hand, the frequency of income tax withholding payments can vary. It often depends on the total tax amount withheld. Common schedules include monthly, semi-weekly, or following the federal deposit schedule.

Late tax payments can incur penalties in West Virginia. The penalty rate for late payments usually involves a percentage charge of the unpaid tax, which can range from 5% to 25%, depending on the delay. Interest charges may also accrue on the unpaid amount.

How to submit payroll taxes in West Virginia

Now that we've covered the types of payroll taxes and their due dates, let's dive into the various methods available for filing these taxes.

Enroll in electronic services

The West Virginia State Tax Department offers an electronic services platform, making payroll tax management more efficient. Through this service, employers can:

• Make payments: Easily submit your tax payments online.
• File and adjust returns: Streamline the process of submitting and amending tax documents.
• Manage accounts: Register, close, or update your business account.

You can find instructions for enrolling in and managing your tax account on the West Virginia State Tax Department website.

File by mail

For those who prefer traditional methods, West Virginia still accepts payroll tax submissions via mail to:

West Virginia State Tax Department
Taxpayer Services Division
PO Box 3694
Charleston, WV 25336-3694

You can find the necessary forms and mailing addresses on the West Virginia State Tax Department’s forms page.

Other payment options

In addition to electronic services and payments by mail, the following options are also available:

• Electronic funds transfer (EFT): Employers can opt for an ACH debit or credit to transfer funds directly from their bank accounts to the state's treasury.
• Credit card payments: Employers can make their tax payments using a credit card online or over the phone.

• Third-party services: There are several third-party services available that can handle tax payments and filing on behalf of the employer.

Rippling’s full-service payroll software

For a hassle-free experience, consider using Rippling’s payroll software. Rippling simplifies the entire payroll tax process by:

• Automating compliance work: Stay compliant with all federal and West Virginia state payroll taxes without any headaches.
• Handling tax forms and payments: Your tax payments and submissions are filed for you—accurately and on time.
• Monitoring tax laws: Rippling consistently monitors and adheres to tax laws, ensuring your business is always up to date.

FAQs about West Virginia payroll taxes

Are there local tax laws in West Virginia?

Many West Virginia municipalities impose a local sales and use tax between 0.5% and 1%.

Can your tax returns be audited in West Virginia?

Yes. Tax returns in West Virginia can be audited by the West Virginia State Tax Department. Businesses should maintain accurate records and documentation to facilitate a smooth audit process if selected.

Are nonprofit organizations subject to payroll taxes in West Virginia?

Nonprofit organizations in West Virginia are generally subject to payroll taxes, particularly for Social Security and Medicare (FICA taxes). However, certain nonprofits may be exempt from state taxes like unemployment insurance tax, depending on their status and activities. 

How does the West Virginia minimum wage impact payroll taxes?

The minimum wage in West Virginia influences the amount of payroll taxes due, as taxes are calculated based on employee wages. Employers must stay updated with the current minimum wage rates to ensure accurate payroll tax calculations.

Are new employers in West Virginia subject to different payroll tax rates?

New employers in West Virginia may be subject to different rates for certain taxes, like unemployment insurance tax. These rates typically reflect a standard new employer rate and may change after a certain period or based on the employer's claim history.

What should employers know about workers’ compensation insurance in West Virginia?

In West Virginia, employers must have workers' compensation insurance, which is a separate requirement from payroll taxes. This insurance provides benefits to employees who suffer job-related injuries or illnesses.

Disclaimer: Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.