Updated October 5, 2026. Quick answer: Yes. West Virginia starts from federal adjusted gross income and taxes interest and dividends on graduated rates that the state cut by 5% for 2026, to 2.11% through 4.58%. Interest on other states’ bonds is added back and U.S. obligation interest is subtracted.
How West Virginia treats dividends and interest
| Item | What the documents say |
|---|---|
| Treatment | Taxed on the graduated schedule |
| 2025 rates | 2.22% on the first $10,000 rising to 4.82% over $60,000: “$2,053.50 plus 4.82% of excess over $60,000” |
| 2026 rates | The Code prints “Over $60,000 $1,950.50 plus 4.58% of excess over $60,000”, and the Tax Division describes “a 5% income tax cut for all West Virginians” |
| Recomputed | 4.82% x 0.95 = 4.579%, printed as 4.58%; 2.22% x 0.95 = 2.109%, printed as 2.11% |
| Other states’ bonds | The instructions add back “INTEREST OR DIVIDEND ON STATE OR LOCAL BONDS (OTHER THAN WEST VIRGINIA)” |
| U.S. obligations | Line 29 subtracts “LINE 29 INTEREST OR DIVIDENDS ON U.S. OBLIGATIONS” and “federal interest dividends paid to shareholders of a regulated investment company” |
| West Virginia bonds | “Include on this line interest earned on West Virginia bonds” that is exempt under West Virginia law |
A $20,000 example
Taxable dividends and interest of $20,000 taxed wholly at the lowest 2026 rate, 2.11%, would add $422; taxed wholly at the top 2026 rate, 4.58%, $916. Your total taxable income decides the bracket.
What changes in 2026
SB 392, signed March 31, 2026, cut every rate by 5% retroactive to January 1, 2026 (W. Va. Code 11-21-4j), so the 2026 schedule runs from 2.11% to 4.58%.
Federal rules
The state’s treatment sits on top of the federal one. Qualified dividends and ordinary dividends are sorted out on the Form 1099-DIV, as the site explains in Box 1a and 1b: ordinary versus qualified dividends, and interest is reported as covered in 1099-INT Box 1. The IRS explains the federal side in Topic no. 403, Interest Received and Topic no. 404, Dividends.
Related: whether West Virginia taxes capital gains, whether West Virginia taxes pensions, how West Virginia taxes retirement income, dividends and interest tax by state, and how tax-exempt interest is reported.
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Answer againSources
- 2025 West Virginia Tax Rate Schedules: https://tax.wv.gov/Documents/PIT/2025/it140.TaxRateSchedules.2025.pdf
- 2025 West Virginia Personal Income Tax Forms and Instructions (IT-140): https://tax.wv.gov/Documents/PIT/2025/it140.PersonalIncomeTaxFormsAndInstructions.2025.pdf
- W. Va. Code 11-21-4j Rate of tax, taxable years beginning on and after January 1, 2026: https://code.wvlegislature.gov/11-21-4j/
- 2026 Income Tax Rate Cut: https://tax.wv.gov/Individuals/Pages/PersonalIncomeTaxReductionBill.aspx
Sources: the primary documents linked above, read on October 5, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.