FISCAL NOTE
Date Requested: January 14, 2026
Time Requested: 06:39 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1037 |
Introduced |
HB4162 |
|
|---|
| CBD Subject: |
Economic Development |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to provide for the creation of the West Virginia Economic Development and Property Revitalization Tax Credit Act of 2026.
The provisions of this bill would create two separate tax credits. (1) A business entity, developer or landholding company that invests at least $50,000 in a property in West Virginia that results in an increase in property value of at least 30 percent would be entitled to a 25 percent investment credit up to a maximum of $2 million per project to offset either State B&O Tax (i.e., a tax on public utilities, electric power generators and natural gas storage) or corporation net income tax; and (2) Property owners may claim a property tax credit equal to 50 percent of the increase in assessed property value due to redevelopment to be applied annually for up to five years. The typical property tax credit would be 10 times greater in value than the local property tax levied on such property given a statewide average Class III/Class IV tax rate of roughly 2.5 percent. All unused credits may be carried forward for up to five years. If the investment occurs in a rural or economically distressed area, including 45 counties with populations under 50,000, then an additional 10 percent tax credit applies. If the property involves either brownfield redevelopment or investment in a historic property according to state and federal historic preservation guidelines, then an additional 5 percent tax credit would apply. The annual limit on all these tax credits would be $50 million.
There are numerous existing tax credits for capital investment including, but not limited to, the Economic Opportunity Tax Credit, the Manufacturing Investment Tax Credit, the Industrial Expansion and Revitalization Tax Credit and the Historic Rehabilitation Building Tax Credit. The provisions of this bill would potentially add these additional tax credits to the existing tax credits on the same investments.
The provisions of the bill would require business and property owners who claim these new tax credits to file an annual compliance report with the State including information on investment, number of new jobs created or retained, documentation on property valuation increases and active business use. The bill contains recapture provisions if the business fails to meet the job creation or property improvement requirements. However, the provisions of this bill contain no requirements relating to job creation.
We are unable to quantify the annual cost of these proposed new tax credits. However, the cost could be somewhat significant given the relatively low investment requirements and the ability to piggyback these new tax credits onto other existing tax credits for the same investment activities.
Additional administrative costs incurred by the State Tax Division would be $46,150 in FY2027 and $22,500 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2026
Increase/Decrease
(use"-") |
2027
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
46,150 |
22,500 |
| Personal Services |
0 |
22,500 |
22,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
22,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The provisions of this bill would create two separate tax credits. (1) A business entity, developer or landholding company that invests at least $50,000 in a property in West Virginia that results in an increase in property value of at least 30 percent would be entitled to a 25 percent investment credit up to a maximum of $2 million per project to offset either State B&O Tax (i.e., a tax on public utilities, electric power generators and natural gas storage) or corporation net income tax; and (2) Property owners may claim a property tax credit equal to 50 percent of the increase in assessed property value due to redevelopment to be applied annually for up to five years. The typical property tax credit would be 10 times greater in value than the local property tax levied on such property given a statewide average Class III/Class IV tax rate of roughly 2.5 percent. All unused credits may be carried forward for up to five years. If the investment occurs in a rural or economically distressed area, including 45 counties with populations under 50,000, then an additional 10 percent tax credit applies. If the property involves either brownfield redevelopment or investment in a historic property according to state and federal historic preservation guidelines, then an additional 5 percent tax credit would apply. The annual limit on all these tax credits would be $50 million.
There are numerous existing tax credits for capital investment including, but not limited to, the Economic Opportunity Tax Credit, the Manufacturing Investment Tax Credit, the Industrial Expansion and Revitalization Tax Credit and the Historic Rehabilitation Building Tax Credit. The provisions of this bill would potentially add these additional tax credits to the existing tax credits on the same investments.
The provisions of the bill would require business and property owners who claim these new tax credits to file an annual compliance report with the State including information on investment, number of new jobs created or retained, documentation on property valuation increases and active business use. The bill contains recapture provisions if the business fails to meet the job creation or property improvement requirements. However, the provisions of this bill contain no requirements relating to job creation.
We are unable to quantify the annual cost of these proposed new tax credits. However, the cost could be somewhat significant given the relatively low investment requirements and the ability to piggyback these new tax credits onto other existing tax credits for the same investment activities.
Additional administrative costs incurred by the State Tax Division would be $46,150 in FY2027 and $22,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide for the creation of the West Virginia Economic Development and Property Revitalization Tax Credit Act of 2026.
The bill requires that the “West Virginia Development Office shall establish a fast-track permitting process for qualifying projects under this Act” in §11-29-5 and claimants of the credit must file annual compliance reports to the Tax Division and WVEDA under §11-29-6 but the bill lacks any rulemaking provisions for any agency. The lack of rulemaking authority may cause administrative issues.
The requirement that “Any improperly claimed credits shall be recaptured by the state through tax adjustments” is vague. The vagueness coupled with the lack of rulemaking authority appears likely to increase administrative difficulties.
This bill does not exclude investments from being claimed under other tax credit programs. It is unclear whether this tax credit is intended to be taken in conjunction with other credits or if the West Virginia Economic Development and Property Revitalization Credit is meant to be taken instead of current credits.
It is ambiguous in §11-29-3(b)(1) as to what the $2 million per project cap applied to. Presumably, it is a cap on the amount of credit but also could be read as the maximum amount of investment costs against which the credit could be applied.
The provision in §11-29-3(b)(2) states, “Property owners may claim a property tax credit equal to 50 percent of the increase in assessed property value due to redevelopment, applied annually for up to five years” is problematic. Tying the amount of the credit to the increase in value of the assessed property rather than to the increase in tax may cause the value of the credit to quickly exceed the amount of property tax to be collected. The mechanism for taking a credit against property tax, a tax that is levied at the local level, is not addressed.
It is unclear if the additional tax incentives for certain areas and locations would apply to both the “Qualified applicant” credit of 25 percent of eligible costs and the property owners credit equal to 50 percent of the increase in assessed value.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov