Governor Jim Justice of West Virginia has announced a 4% reduction in personal income taxes for residents starting on January 1st. This decision comes after the state’s revenues met the required threshold for the tax cut to be triggered. The certification of this reduction was done by Revenue Secretary Larry Pack and State Auditor JB McCuskey.

Last year, Justice signed a 21.25% income tax reduction, and the new law allows for additional tax cuts based on a formula involving higher-than-expected annual revenue collections, with a cap of 10%. The Governor has been an advocate for eliminating personal income tax entirely to boost economic growth in one of the country’s poorest states. However, the 2023 law represents a compromise between the executive branch and the state Legislature, opting for a more gradual approach.

While Governor Justice expressed his desire to completely eliminate the personal income tax, he acknowledged that it might not happen during his tenure, but emphasized the state’s progress towards that goal. He believes that eliminating the personal income tax will attract more residents and prosperity to West Virginia. Justice had previously suggested calling lawmakers back for a special session to consider a further 5% cut, but no dates have been set for such a session.

The West Virginia Center On Budget and Policy has cautioned against more tax cuts, highlighting that the personal income tax is the state’s primary revenue source. The organization mentioned that due to stagnant budgets over the years, essential areas like education and childcare have faced funding challenges.