The largest tax cut in West Virginia’s history has been signed into law by Gov. Jim Justice.
“The world is watching West Virginia. The world sees West Virginia in a different light today,” Justice said at the signing ceremony in Charleston on Tuesday. “We’re not the blunt end of a bad joke. We’re the diamond in the rough people missed.”
Income tax rates are reduced by 21.25% this year, which is expected to return more than $750 million to residents in 2023.
Additional income tax cuts will occur in 2024 through refundable tax credits equal to the amount of car taxes paid to county sheriffs and half of the amount of tangible personal property taxes paid to the county sheriff for qualified small businesses, the law says. Disabled veterans will be eligible for an additional income tax credit.
The bill, HB 2526, contains provisions for additional annual personal income tax rate cuts in future years, beginning as early as 2025 if state revenue growth exceeds consumer inflation.
The governor said these triggers put the state on the path toward the elimination of the personal income tax.
Two years ago, Justice proposed abolishing the tax and “since that time, I’ve been doggedly pursuing a meaningful tax reform deal to help our people struggling with inflation and to give them back their share of our state’s financial successes,” he said.
“It’s been a long two years to get to this point and I thank all West Virginians for sticking with me. Now, it’s finally our time to seize the opportunity to transform West Virginia’s tax structure in unprecedented ways, raise wages, raise home values, bring in even more businesses, more people, and make life better for all West Virginians.”
West Virginia’s general revenue collections in February came in $111.8 million above estimates and 5.7% ahead of the same time last year. Estimated collections for February were $407 million, according to state data. Collections for last month had been estimated at $295 million.
Estimated collections for the eight months from July (the start of the fiscal year) to February were $1.1 billion above estimates, coming in at $4.08 billion, while collections had been estimated to be $2.976 billion.
Personal income tax collections totaled $122.0 million last month, exceeding estimates by $16.9 million and prior year receipts by 11.0%.
Consumer sales tax collections of $143.2 million were $26.6 million above estimate and 13.7% higher than last February’s receipts. Fiscal year-to-date collections of $1.129 billion were $148.3 million above estimates and 6.3% higher than last February.
Corporation net income tax collections hit $3.0 million in February, $2.0 million above estimates while fiscal year-to-date collections of $214.4 million were $125.4 million above the official estimate and 15.6% ahead of prior year-to-date collections.
General revenue fund severance tax collections hit almost $71.0 million last month. Monthly collections exceeded the official estimate by nearly $43.0 million. Record year-to-date general revenue fund severance tax collections of $702.2 million were 68.6% ahead of last year and $540.8 million above estimate.
West Virginia’s general obligation bonds are rated Aa2 by Moody’s Investors Service, AA-minus by S&P Global Ratings and AA by Fitch Ratings.