Before the 1930s, property taxes generally yielded more than 90 percent of total state and local revenues in West Virginia. The property tax is imposed upon the assessed value of real property and tangible personal property. Generally, an elected county assessor appraises the fair market value of all taxable property within the county as of July 1 of each year. Industrial property is appraised by the state Tax Department. In West Virginia, property is assessed at 60 percent of its appraised value. Taxes levied upon the assessed value of property are due in two installments, to be paid to the county sheriff by September 1 of the year following the year of assessment and by March 1 of the year after that.

Prior to 1921, most state tax collections came from two sources, an excise tax on corporations and an inheritance tax. The excise tax was a relatively new tax tied to the federal income tax on corporations, as approved by Congress following adoption of the 16th Amendment in 1913. The West Virginia legislature first imposed the corporate excise tax in 1915, as a replacement for liquor license fees lost when the state adopted liquor prohibition in 1914.

In 1921, the state replaced its corporate excise tax with a business gross receipts tax later referred to as the business and occupation (B&O) tax. Some had argued that the corporate excise tax unfairly singled out corporations for taxation while other businesses went untaxed. The B&O tax applied more broadly and was the state's major source of tax revenue for the next 65 years. It was eliminated for most business activities in 1987, and replaced with a severance tax imposed upon gross receipts of mining and other extractive companies and a business franchise tax imposed upon net equity of corporations and partnerships. However, many local municipalities still retain a B&O tax. For some municipalities, the B&O tax may account for up to 60 percent of total tax revenue.

The Depression had a profound effect upon government finance in West Virginia. A weakened economy depressed property values and led to a gradual decline in property tax revenue from $52 million in 1928 to $27 million in 1933. Many citizens faced the prospect of losing their property for nonpayment of taxes. This created the impetus for the 1932 Tax Limitation Amendment. This amendment to the state constitution created four classes of property, and established a maximum tax levy rate for each property class. As a result, the property tax burden for West Virginia homeowners is among the lowest in the nation.

The revenue void caused by reduced property taxes was initially filled by a new state tax on retail sales. West Virginia was one of 28 states adopting a sales tax during the 1930s. The sales tax was initially imposed at a rate of two percent, effective April 1, 1934, and was six percent in 2010. A reduced rate of three percent applied to sales of unprepared food for home consumption until July 2013, when the tax was eliminated. While most other states generally applied their sales tax to goods, the West Virginia consumer sales tax applied to both goods and services, with some exemptions of services.

The growth in remote interstate commerce, typically involving mail-order sales to West Virginia consumers by vendors not registered to collect the state's tax, prompted the adoption of a two percent use tax in 1951, now six percent. The use tax is imposed upon consumer purchases bought out of state for use in West Virginia, including mail-order and Internet commerce, but is sometimes difficult to enforce. Motor vehicles are exempt from the six percent sales and use taxes, but are subject to a five percent sales tax. This tax is paid when a vehicle is registered in West Virginia for the first time with a credit for taxes paid to other states. The six percent sales and use taxes account for roughly 30 percent of total general revenue fund collections and roughly 17 percent of total state and local tax revenue.

The education of the large post-war "baby boom" generation and the creation of Medicaid, a government health care program, placed a significant financial burden upon state and local governments in the second half of the 20th century. In response, West Virginia adopted a personal income tax in 1961 and a corporate net income tax in 1967.

The starting point for the determination of the corporate net income tax is federal taxable income. The tax rate was initially set at six percent on the first $50,000 of taxable income and seven percent of taxable income in excess of $50,000. When the B&O tax was eliminated for most business activities in 1987, the corporate net income tax rate rose to 9.75 percent. Thereafter, the tax rate gradually declined to 8.5 percent by 2009. This tax typically accounts for no more than six percent of the state's total general revenue.

The basis of the West Virginia personal income tax is the taxpayer's federal adjusted gross income, with certain modifications, minus personal exemptions. The state personal exemption equals $2,000 for each personal exemption claimed on the federal tax return. In 1961, the rate of tax was equal to six percent of the federal tax applied to West Virginia taxable income. Tax rate structures changed frequently over the years, with the most recent change in 1987. Tax rates now generally range from three percent on the first $10,000 of taxable income to 6.5 percent on taxable income in excess of $60,000. The personal income tax is now the largest source of state revenue, with a yield of more than $1.6 billion per year.

In fiscal year 2007-2008, West Virginia ranked 37th in the nation with a state and local tax burden per capita of $3,542, as compared to the U.S. average of $4,371. This is largely attributable to below average economic activity in terms of gross state product, personal income, and personal consumption expenditures. Due largely to the Tax Limitation Amendment, local governments collect just 24 percent of all state and local taxes, versus a national average of 41 percent. The three major sources of state and local tax revenue (property tax, sales tax, and personal income tax) account for an average of 77 percent of total tax revenue nationally, but just 60 percent of total tax revenue in West Virginia. As a result, the portion of total state and local tax revenues paid through business taxes is significantly higher in West Virginia than the national average.