FISCAL NOTE
Date Requested: January 29, 2026
Time Requested: 09:34 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2857 |
Introduced |
HB4858 |
|
|---|
| 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 relates to the tax credit for qualified rehabilitated buildings investment.
Per our interpretation, the bill would create a new article, §11-13NN, “The West Virginia Historic Rehabilitated Building Tax Credit Act” and provide a sunset for the current rehabilitation credits outlined under §11-21-8a through 8h and §11-24-23a through 23g. The new article reorganizes and clarifies the credit’s requirements, sets forth procedures to claim the credit, and provides for the recapture of the credit. Additionally, the bill adds language to §11-24-23a which allows the credit earned under this section to be claimed against the Insurance Premium Tax and authorizes the credit to be claimed based on the “placed-in-service” date.
For “Certified Historic Structures, the credit percentage is retained at 25 percent of qualified rehabilitation expenditures. The credit percentage for “Residential Certified Historic Structures” is increased from 20 percent to 25 percent of eligible rehabilitation expenses in the rehabilitation of a certified historic structure. In addition, the carry forward period for “Residential Certified Historic Structures” is increased from the next 5 years to the next 10 tax years following the first tax year for which the credit entitlement is authorized.
The provisions of §11-13NN are effective for all applications received by the State Historic Preservation Officer on or after June 30, 2026, and any prior application for which Part 3-Request for Certification of Completed Work, including amendments, was not physically received by the State Historic Preservation Officer prior to June 30, 2026. Section §11-21-8i sunsets the credits allowed under §11-21-8a and §11-21-8g effective June 30, 2026. Section §11-24-23h sunsets the credits allowed under §11-24-23a effective June 30, 2026.
Based on our interpretation, the provisions of the new article §11-13NN, if passed, would cause an average decline in General Revenue Fund collections of roughly $90,000 per year beginning in FY2027. The decline is attributable to the increased credit percentage for “Residential Certified Historic Structures” and some anticipated growth in usage of the credit. Claims related to “Residential Certified Historic Structures” vary considerably from year to year; therefore, an average decline is used for estimation purposes.
The legislation adds new language to §11-24-23a(a) allowing the credit to be claimed against the “Insurance Premium Tax”. The Insurance Premium Tax is administered by the Insurance Commission, not the State Tax Division. The credit which could be claimed against the tax is limited to credit earned, and not already utilized, from projects whose Part-3 Request for Certification of Completed Work was submitted prior to June 30, 2026. The impact of this provision on General Revenue Fund collections is undeterminable. The bill allows the credit to be claimed against “the insurance premium tax as imposed by the provisions of Chapter §33 of this Code.” This would potentially include Insurance premium tax collections dedicated to volunteer fire departments, municipal pensions, and the teacher’s retirement fund.
The legislation also adds new language to §11-24-23a(c)(3) allowing all tax credits allocated through a tax credit certificate issued pursuant to the section to be available for the year the qualified rehabilitated building is “placed-in-service”. This provision would only impact credit earned by projects whose Part-3 Request for Certification of Completed Work was submitted prior to June 30, 2026. This provision would potentially cause a limited number of amended returns to be filed to utilize unused credit in earlier tax periods. The impact of this provision on General Revenue Fund collections is undeterminable.
Additional administrative costs incurred by the State Tax Division would be $1,100 in FY2026, $46,450 in FY2027 and $44,800 in subsequent fiscal year. The Insurance Commission would also incur additional administrative costs to set up and process the credit claims.
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 |
1,100 |
46,450 |
44,800 |
| Personal Services |
0 |
44,800 |
44,800 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
1,100 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-90,000 |
-90,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would create a new article, §11-13NN, “The West Virginia Historic Rehabilitated Building Tax Credit Act” and provide a sunset for the current rehabilitation credits outlined under §11-21-8a through 8h and §11-24-23a through 23g. The new article reorganizes and clarifies the credit’s requirements, sets forth procedures to claim the credit, and provides for the recapture of the credit. Additionally, the bill adds language to §11-24-23a which allows the credit earned under this section to be claimed against the Insurance Premium Tax and authorizes the credit to be claimed based on the “placed-in-service” date.
For “Certified Historic Structures, the credit percentage is retained at 25 percent of qualified rehabilitation expenditures. The credit percentage for “Residential Certified Historic Structures” is increased from 20 percent to 25 percent of eligible rehabilitation expenses in the rehabilitation of a certified historic structure. In addition, the carry forward period for “Residential Certified Historic Structures” is increased from the next 5 years to the next 10 tax years following the first tax year for which the credit entitlement is authorized.
The provisions of §11-13NN are effective for all applications received by the State Historic Preservation Officer on or after June 30, 2026, and any prior application for which Part 3-Request for Certification of Completed Work, including amendments, was not physically received by the State Historic Preservation Officer prior to June 30, 2026. Section §11-21-8i sunsets the credits allowed under §11-21-8a and §11-21-8g effective June 30, 2026. Section §11-24-23h sunsets the credits allowed under §11-24-23a effective June 30, 2026.
Based on our interpretation, the provisions of the new article §11-13NN, if passed, would cause an average decline in General Revenue Fund collections of roughly $90,000 per year beginning in FY2027. The decline is attributable to the increased credit percentage for “Residential Certified Historic Structures” and some anticipated growth in usage of the credit. Claims related to “Residential Certified Historic Structures” vary considerably from year to year; therefore, an average decline is used for estimation purposes.
The legislation adds new language to §11-24-23a(a) allowing the credit to be claimed against the “Insurance Premium Tax”. The Insurance Premium Tax is administered by the Insurance Commission, not the State Tax Division. The credit which could be claimed against the tax is limited to credit earned, and not already utilized, from projects whose Part-3 Request for Certification of Completed Work was submitted prior to June 30, 2026. The impact of this provision on General Revenue Fund collections is undeterminable. The bill allows the credit to be claimed against “the insurance premium tax as imposed by the provisions of Chapter §33 of this Code.” This would potentially include Insurance premium tax collections dedicated to volunteer fire departments, municipal pensions, and the teacher’s retirement fund.
The legislation also adds new language to §11-24-23a(c)(3) allowing all tax credits allocated through a tax credit certificate issued pursuant to the section to be available for the year the qualified rehabilitated building is “placed-in-service”. This provision would only impact credit earned by projects whose Part-3 Request for Certification of Completed Work was submitted prior to June 30, 2026. This provision would potentially cause a limited number of amended returns to be filed to utilize unused credit in earlier tax periods. The impact of this provision on General Revenue Fund collections is undeterminable.
Additional administrative costs incurred by the State Tax Division would be $1,100 in FY2026, $46,450 in FY2027 and $44,800 in subsequent fiscal year. The Insurance Commission would also incur additional administrative costs to set up and process the credit claims.
Memorandum
The stated purpose of this bill relates to the tax credit for qualified rehabilitated buildings investment.
The title does not address two substantial objects of the bill, which is to change the date the pre-existing Corporation Net Income Tax credit can be claimed to the date the property was placed into service, and to allow the pre-existing Corporation Net Income Tax credit to be claimed against the Insurance Premium Tax, which is not administered by the Tax Division.
A recapture tax is imposed in specified instances of taxpayer default under section §11-13NN-9. This section has internal inconsistencies. For example, subsection (b) bars recourse against a transferee, but subsection (c) states, “If it appears upon audit or otherwise that any person or entity has taken the credit against tax allowed under this article and was not entitled to take the credit, then the credit improperly taken under this article shall be recaptured.” Further, subsection (c) both extends the audit period and provides a five-year statute of limitations for assessments.
Section §11-24-23(a) is amended so that this particular credit can be applied against the Insurance Premium Tax. It is recommended that an official from the Insurance Commission review this bill. There are two Article 21 credits that would not be subject to being claimed against the Premium Tax, so there are potential equal protection claims. The Tax Division does not administer the Insurance Premium Tax, so it would be difficult to administer this credit if it can be applied against the Corporation Net Income Tax and the Insurance Premium Tax. Application of this credit against the Insurance Premium Tax could adversely impact dedicated funding which benefits volunteer fire departments, municipal pensions, and the teacher’s retirement fund.
Section §11-24-23(a)(c) is amended by adding the sentence: “Notwithstanding, as of July1, 2026, all tax credits allocated through a tax credit certificate issued pursuant to this section shall be available for the year the qualified rehabilitated building is “placed-in-service” (or for phased projects, when each phase is placed-in-service) as defined in §1.179-4(e), Title 26 of the United States Code.” Again, this amendment only addresses the credit set forth in §11-24-23a, although Article 21 has similar credits, which might give rise to equal protection claims. This section mandates that the credits be available as of the date placed into service. Most taxpayers followed the law as written, so they could be adversely affected if their credits were in the process of being carried forward because the credit would suddenly have become available earlier than anticipated, meaning that the credits would not be available for the duration of the anticipated carry forward period.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov