FISCAL NOTE
Date Requested: January 29, 2026
Time Requested: 06:24 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3041 |
Introduced |
HB4968 |
|
|---|
| 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 exempt the first $20,000 of income of resident individuals from personal income taxation.
According to our interpretation, the bill would create an additional modification reducing the federal adjusted gross income of a West Virginia resident individual in the amount of $20,000. The legislation would be effective for all taxable years beginning on and after January 1, 2026.
Based on our interpretation and current filing trends, the proposed legislation would decrease General Revenue Fund collections by a minimal amount in FY2026, $465.0 million in FY2027, and by increasing amounts in subsequent fiscal years. Currently only a small portion of married taxpayers file separately. If both spouses have taxable income, they could potentially reduce their total tax liability by filing separately. Based on Tax Year 2024 filed returns, more than 80 percent of Married Joint filers would benefit by filing separate returns to take advantage of this modification. If the majority of taxpayers who currently file joint returns elect to file separately to take advantage of the tax savings, the decline in General Revenue Fund collections could increase by as much as an additional $185 million per year.
Additional administrative costs incurred by the State Tax Department would be $135,800 in FY2027 and $105,000 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 |
135,800 |
105,000 |
| Personal Services |
0 |
105,000 |
105,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
3,300 |
0 |
| Other |
0 |
27,500 |
0 |
| 2. Estimated Total Revenues |
0 |
-465,000,000 |
-485,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the bill would create an additional modification reducing the federal adjusted gross income of a West Virginia resident individual in the amount of $20,000. The legislation would be effective for all taxable years beginning on and after January 1, 2026.
Based on our interpretation and current filing trends, the proposed legislation would decrease General Revenue Fund collections by a minimal amount in FY2026, $465.0 million in FY2027, and by increasing amounts in subsequent fiscal years. Currently only a small portion of married taxpayers file separately. If both spouses have taxable income, they could potentially reduce their total tax liability by filing separately. Based on Tax Year 2024 filed returns, more than 80 percent of Married Joint filers would benefit by filing separate returns to take advantage of this modification. If the majority of taxpayers who currently file joint returns elect to file separately to take advantage of the tax savings, the decline in General Revenue Fund collections could increase by as much as an additional $185 million per year.
Additional administrative costs incurred by the State Tax Department would be $135,800 in FY2027 and $105,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to exempt the first $20,000 of income of resident individuals from personal income taxation.
This bill provides an additional modification reducing federal adjusted gross income. The language of the reducing modification is confusing, in that it refers to “the first $20,000 of income,” while a true reducing modification applies regardless of whether the amount is the first, second, or last $20,000 of income received by the taxpayer.
Person submitting Fiscal Note: Mark Muchow
Email Address: ra