CHARLESTON, W.Va. — Legislative measures aimed at easing the income tax load for residents of West Virginia are on their way to Governor Jim Justice for approval. One of the measures proposes a 2% reduction in the state’s personal income tax, while the other introduces a tax credit designed to assist families with childcare expenses. Governor Justice, a Republican who is approaching the end of his second gubernatorial term and has announced plans to run for the U.S. Senate, is anticipated to endorse both initiatives following their passage during a special session convened by him.
Reducing personal income tax has been a key focus for Justice. Last year, he enacted a significant tax cut of 21.25%, and an additional 4% decrease is slated for next year, contingent on the state experiencing higher-than-expected revenue collections, as per a provision in the 2023 tax legislation. Although Justice initially aimed for a more substantial 5% tax reduction, he revised the proposal to a modest 2% cut just before this week’s session.
Should the 2% cut take effect at the beginning of the new year, it is estimated to put approximately $46 million back into taxpayers’ hands. Del. Vernon Criss, who chairs the House Finance Committee, expressed a preference for a 5% cut but acknowledged that a consensus could not be reached with the Senate on this issue. “We are still making progress,” he mentioned, emphasizing the collective desire for beneficial changes.
The funding for this tax reduction is expected to be sourced from an expiring revenue bond, along with $27 million in savings attributed to the reorganization of the previous Department of Health and Human Resources into three separate agencies earlier this year, as suggested by the Justice administration.
Members of the Democratic Party voiced their concerns regarding the proposal, highlighting the lack of clarity about the origin of the savings and the potential ramifications for state services. West Virginia currently holds the highest rate of children in foster care per capita nationwide. Democratic Del. Kayla Young stated her longstanding support for tax cuts but voiced unease about the uncertainty surrounding the funding source. “I am uncomfortable with not knowing the origins of this money,” she remarked.
House Minority Leader Sean Hornbuckle criticized the tax cut, arguing that it would have a negligible effect on the financial situations of most working-class families, estimating the benefit at roughly 40 cents a week, or nearly $21 a year. He pointed out that the current trigger mechanism in the 2023 tax law represents a more prudent strategy and questioned the timing of the governor’s push for additional tax cuts so close to the election. “The policy is ultimately harming our children,” he argued, suggesting that a more thorough discussion was needed to ensure the fiscal decisions would not negatively impact youth.
Conversely, Republican Del. Larry Kump of Berkeley County defended the significance of a 2% cut, recalling his own experiences growing up in a lower-income environment. He noted the tough choices faced by families between essentials like food and heating. “Every little bit counts. A gallon of milk can support a family,” he articulated, asserting that any actions taken to lessen tax burdens are beneficial.
In parallel, a child and dependent tax credit approved by the state legislature is set to provide a non-refundable credit of approximately $225 for taxpayers eligible for the federal child care tax credit, which amounts to about $450 annually. This initiative is expected to benefit roughly 16,000 families in West Virginia, with an anticipated return of around $4.2 million to state taxpayers.
