FISCAL NOTE
Date Requested: February 10, 2026
Time Requested: 03:06 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3915 |
Introduced |
HB5389 |
|
|---|
| CBD Subject: |
Military and Veterans; 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 incentivize the redevelopment of existing structures into permanent or transitional housing for homeless veterans through a transferable tax credit, without creating a new entitlement or ongoing state operation obligation.
This bill would provide a tax credit for eligible nonprofit organizations which rehabilitate, renovate, or convert existing hotels, motels, or commercial buildings into residential units primarily utilized by homeless veterans. Lastly, the project must provide, directly or through partnerships, access to supportive services. The credit would be applied against the Corporation net Income Tax, Personal Income Tax, Business Franchise Tax, or any other tax administered by the Department of Revenue except for severance taxes. The Business Franchise Tax was terminated on January 1, 2015.Any unused credit can be carried forward for up to ten years and may be transferred to one or more taxpayers one time. The credit would be equal to 30 percent of qualified redevelopment costs and is effective beginning on July 1, 2026.
According to the most recent data, there are approximately 132 eligible homeless veterans living in West Virginia and 9,211 eligible 501(c)(3) nonprofit organizations in the state. There are currently a number of national resources and programs for housing veterans such as VA Supportive Housing, CHRMP Grants, Supportive Services for Veteran Families in addition to non-profit and community-based programs. These programs support initiatives that include renovating existing structures into safe and permanent housing. Due to the relatively low number of eligible veterans and a lack of data to suggest the volume of potential redevelopment projects in the state, we cannot reasonably estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Division would be $59,350 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 |
59,350 |
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 |
35,200 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
This bill would provide a tax credit for eligible nonprofit organizations which rehabilitate, renovate, or convert existing hotels, motels, or commercial buildings into residential units primarily utilized by homeless veterans. Lastly, the project must provide, directly or through partnerships, access to supportive services. The credit would be applied against the Corporation net Income Tax, Personal Income Tax, Business Franchise Tax, or any other tax administered by the Department of Revenue except for severance taxes. The Business Franchise Tax was terminated on January 1, 2015.Any unused credit can be carried forward for up to ten years and may be transferred to one or more taxpayers one time. The credit would be equal to 30 percent of qualified redevelopment costs and is effective beginning on July 1, 2026.
According to the most recent data, there are approximately 132 eligible homeless veterans living in West Virginia and 9,211 eligible 501(c)(3) nonprofit organizations in the state. There are currently a number of national resources and programs for housing veterans such as VA Supportive Housing, CHRMP Grants, Supportive Services for Veteran Families in addition to non-profit and community-based programs. These programs support initiatives that include renovating existing structures into safe and permanent housing. Due to the relatively low number of eligible veterans and a lack of data to suggest the volume of potential redevelopment projects in the state, we cannot reasonably estimate the revenue impact of this bill.
Additional administrative costs incurred by the State Tax Division would be $59,350 in FY2026 and $22,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to incentivize the redevelopment of existing structures into permanent or transitional housing for homeless veterans through a transferable tax credit, without creating a new entitlement or ongoing state operating obligation.
The Tax Division is not given any rulemaking or other authority to directly carry out or oversee this credit despite being responsible for administering the taxes against which the credit is to be taken.
An effective date of July 1, 2026, is concerning because it creates a significant administrative burden on the Department of Revenue to attempt to create the procedure and rules for an entirely new program within a few short months. Moreover, it is in the middle of the 2026 tax year. It is unclear if it should be available for the 2026 tax year or the 2027 tax year.
The credit would be allowed to be taken against any tax except “severance tax” for up to 10 tax years. This is problematic because not all taxes are due in the same periods, and different taxes may be administered through different departments of the Tax Division.
The bill says the tax may be recaptured, but it is unclear if the taxpayer or the nonprofit organization that actually applied for and earned the credit would be subject to the recapture. There is no protection for the entity that purchases the credit if a nonprofit organization ceases to continue to carry out the requirements for receiving such credit for the minimum time period. It is also unclear how the recapture is applied if more than one taxpayer received a portion of the credit. Also, the bill does not address whether the income from the sale of the credit would be taxable.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov