FISCAL NOTE
Date Requested: January 29, 2026
Time Requested: 06:18 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3040 |
Introduced |
HB4954 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
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 a reduction of the business and occupation tax rate for companies who have 75 percent or more of their workforce as West Virginia residents.
According to our interpretation, this bill would reduce the overall business and occupation tax rate by 2.5 percent for companies that employ at least 75 percent of their workforce as West Virginia residents. Tax rates vary greatly among taxpayers subject to the Business and Occupation Tax with some tax rates expressed in percentage terms and some tax rates expressed in unit terms. Due to the lack of clarification relating to the 2.5 percent rate reduction, we assumed that all taxes paid are reduced by 2.5 percent. The state business and occupation tax applies to electric power companies, public utilities, and natural gas storage companies. In FY2025, West Virginia collected $103,890,000 in B & O Tax. Under the assumption that all affected companies pass the 75 percent West Virginia resident workforce test, a reduction in the overall tax paid of 2.5 percent would result in a loss in revenue of at least $2.6 million per year.
Additional administrative costs incurred by the State Tax Division would be $46,150 in FY2026 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 |
46,150 |
22,500 |
22,500 |
| Personal Services |
22,500 |
22,500 |
22,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
1,650 |
0 |
0 |
| Other |
22,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-2,600,000 |
-2,600,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, this bill would reduce the overall business and occupation tax rate by 2.5 percent for companies that employ at least 75 percent of their workforce as West Virginia residents. Tax rates vary greatly among taxpayers subject to the Business and Occupation Tax with some tax rates expressed in percentage terms and some tax rates expressed in unit terms. Due to the lack of clarification relating to the 2.5 percent rate reduction, we assumed that all taxes paid are reduced by 2.5 percent. The state business and occupation tax applies to electric power companies, public utilities, and natural gas storage companies. In FY2025, West Virginia collected $103,890,000 in B & O Tax. Under the assumption that all affected companies pass the 75 percent West Virginia resident workforce test, a reduction in the overall tax paid of 2.5 percent would result in a loss in revenue of at least $2.6 million per year.
Additional administrative costs incurred by the State Tax Division would be $46,150 in FY2026 and $22,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide a reduction of the business and occupation tax rate for companies who have 75 percent or more of their workforce as West Virginia residents.
There are several issues with this bill. The threshold to receive the credit is vague. The term “at least 75 percent” does not include a timeframe. A company may have more or less than 75 percent of employees as in-state residents at any given time throughout the year. It is whether the threshold is something that only needs to be met at one point in time or whether the employer needs to prove 75 percent employment of in-state residents on average over a period of time. Further, businesses may have operations in West Virginia yet still be based in another state and have their employees in another state.
The issue with subsection (c) is that the word “credit” is used. This bill does not provide a credit; it provides a rate reduction. On the other hand, if a “credit” (presumably a credit that reduces liability by 2.5 percent) is what is intended, then use of the “rate reduction” terminology is also confusing.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov