FISCAL NOTE
Date Requested: February 05, 2026
Time Requested: 04:44 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3745 |
Introduced |
SB766 |
|
|---|
| CBD Subject: |
Taxation |
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|
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 establish a tax credit for eligible family members providing caregiver services to an eligible family member.
The bill creates a new article, W.Va. Code §11-29, titled “Caregiver Tax Credit Act.” The bill provides for a credit against the Personal Income Tax in the amount of 50 percent for eligible expenditures incurred by a family caregiver for the support of an eligible family member. The maximum allowable credit is $2,000 or $3,000 if the eligible family member is a veteran. The credit is non-refundable and unused credit cannot be carried forward or back to another tax period. The credit can only be allocated to one family caregiver per taxable year. The total credits authorized are capped at $5 million. The effective date of the Article is January 1, 2027. However, the tax credit is allowable for taxable years beginning on and after January 1, 2028.
The bill defines an “eligible family member” as: an individual who is 62 years of age or older; is a dependent, spouse, parent, or other relation by blood or marriage to the family caregiver; lives in a private residential home; and requires assistance with at least one activity of daily living. “Family caregiver” means an individual who: is a resident individual for the taxable year; is providing care, which can include physical or financial support, for an eligible family member; and has personally incurred uncompensated expenses directly related to the care of an eligible family member.
According to reports from AARP and Caregiver.org, there are roughly 375,000 family caregivers in West Virginia. Using data from a 2025 survey, AARP calculated that a typical family caregiver spends an average of $7,200 of their own money each year. Though the typical family caregiver in West Virginia may be eligible for the maximum credit of $2,000 (or $3,000 for those caring for a veteran), many may have insufficient tax liability to fully utilize their available credit in a single tax year.
Based on our interpretation, the proposed legislation, if passed, would cause a loss in General Revenue Fund collections of more than $170 million in FY2029 and FY2030, and $5 million per year beginning in FY2031. The impact on General Revenue Fund collections in the first two years of credit eligibility would be significantly higher due to the language controlling how the credit cap is calculated which requires that a formula be applied to the credits claimed in the second preceding year. There would be no credits in the “second preceding year” until year three. Without a cap, the credit claimed in the first two years of eligibility could exceed $170 million per year.
Additional administrative costs incurred by the State Tax Department would be $40,650 in FY2028 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 |
0 |
22,500 |
| Personal Services |
0 |
0 |
22,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-5,000,000 |
Explanation of above estimates (including long-range effect):
The bill creates a new article, W.Va. Code §11-29, titled “Caregiver Tax Credit Act.” The bill provides for a credit against the Personal Income Tax in the amount of 50 percent for eligible expenditures incurred by a family caregiver for the support of an eligible family member. The maximum allowable credit is $2,000 or $3,000 if the eligible family member is a veteran. The credit is non-refundable and unused credit cannot be carried forward or back to another tax period. The credit can only be allocated to one family caregiver per taxable year. The total credits authorized are capped at $5 million. The effective date of the Article is January 1, 2027. However, the tax credit is allowable for taxable years beginning on and after January 1, 2028.
The bill defines an “eligible family member” as: an individual who is 62 years of age or older; is a dependent, spouse, parent, or other relation by blood or marriage to the family caregiver; lives in a private residential home; and requires assistance with at least one activity of daily living. “Family caregiver” means an individual who: is a resident individual for the taxable year; is providing care, which can include physical or financial support, for an eligible family member; and has personally incurred uncompensated expenses directly related to the care of an eligible family member.
According to reports from AARP and Caregiver.org, there are roughly 375,000 family caregivers in West Virginia. Using data from a 2025 survey, AARP calculated that a typical family caregiver spends an average of $7,200 of their own money each year. Though the typical family caregiver in West Virginia may be eligible for the maximum credit of $2,000 (or $3,000 for those caring for a veteran), many may have insufficient tax liability to fully utilize their available credit in a single tax year.
Based on our interpretation, the proposed legislation, if passed, would cause a loss in General Revenue Fund collections of more than $170 million in FY2029 and FY2030, and $5 million per year beginning in FY2031. The impact on General Revenue Fund collections in the first two years of credit eligibility would be significantly higher due to the language controlling how the credit cap is calculated which requires that a formula be applied to the credits claimed in the second preceding year. There would be no credits in the “second preceding year” until year three. Without a cap, the credit claimed in the first two years of eligibility could exceed $170 million per year.
Additional administrative costs incurred by the State Tax Department would be $40,650 in FY2028 and $22,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to establish a tax credit for eligible family members providing caregiver services to an eligible family member.
While the credit is to be claimed is based on what has been defined as “eligible expenses,” proposed W.Va. Code §11-29-2(4)(B) states that physical support, not just financial support, would be sufficient for an individual to be deemed a family caregiver for purposes of the caregiver credit. It is unclear how physical assistance by the individual would be quantified effectively in order to claim the credit, or how the hours could be verified.
As the bill is written, the statute may allow for double dipping of tax credits relating to dependent medical care. Pursuant to 26 U.S.C. §213, an individual may deduct certain unreimbursed medical expenses paid on behalf of the individual’s “qualifying relative’ from the individual’s gross income when certain conditions are met. The requirements for deducting the medical expenses of a qualifying relative are similar to those described in this bill. Therefore, the federal adjusted gross income, upon which the state income tax is based, may already account for those medical expenses.
Furthermore, to the extent such medical expenses of a qualifying relative are not covered by 26 U.S.C. § 213, when the amount of medical expenses are unable to be deducted from the individuals gross income, W.Va. Code §11-21-12c allows an individual to deduct the premiums for long-term care insurance paid on behalf of the individual’s spouse, parent, or dependent. Long-term care insurance often covers expenses for individuals still living in a private residence, such as nurses, personal care assistance like bathing, and meal preparation. The broad manner in which this bill is written would appear to allow an individual to deduct these premiums as well.
Proposed W.Va. Code §11-29-4(a) provides that a family caregiver married and filing jointly would allow for the spouse to also be recognized as a family caregiver. It is unclear whether this would allow for a credit of up to $4,000 instead of $2,000.
Section §11-29-39(e) states that the credit is capped at $5 million:
(e) The total credits authorized pursuant to this section for all taxpayers shall not exceed $5 million. The West Virginia State Department of Revenue shall publish by the first day of the affected year a percentage by which the tax credits authorized by this section shall be reduced so the total amount of credits used to offset the tax does not exceed $5 million annually per year. The formula to be used for the percentage adjustment shall be $5 million divided by the credits claimed in the second preceding year.
Much of the language in subsection (e) is difficult to understand and will be difficult to administer. It is unclear whether the credit is to be meted out on a first-come, first-served basis (potentially leaving many anticipated beneficiaries without a credit at all) or distributed among all taxpayers claiming the credit. The meanings of “the affected year” and “the second preceding year” are unclear. If the credit percentage is adjusted annually based on the “credits claimed in the second preceding year,” then how can it be adjusted during the first two years, when there is no “second preceding year” of the credit being taken.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov