FISCAL NOTE
Date Requested: February 12, 2026
Time Requested: 05:09 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4008 |
Introduced |
HB5460 |
|
|---|
| 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.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
The provisions of this bill would provide a rebate payment for new home construction that might be loosely tied to sales tax paid on building materials. The proposed rebate formula is unclear with a lack of clear definition of the basis for rebate. The bill provides that a “new home builder who sells the home may claim up to 30 percent of the sales price as the established value of the materials calculated above.” However, another section of this bill provides for a 1.35 multiplier to the sales price value. There is no reference to the amount of sales tax subject to rebate or whether the rebate would include any municipal sales tax. Under the assumption that the rebate is only related to some calculation of State sales tax on either the actual value of a new home at sale or 1.35 times the actual value of a new home at sale, then the revenue loss to the State General Revenue Fund would generally range between $18 million and $24 million per year based on actual 2024 building permit data. Sales tax on building materials generally account for less than 2 percent of the actual price of a new home.
Additional administrative costs incurred by the State Tax Division would be $59,350 in FY2027 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 |
59,350 |
22,500 |
| Personal Services |
0 |
22,500 |
22,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
35,200 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-21,000,000 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
The provisions of this bill would provide a rebate payment for new home construction that might be loosely tied to sales tax paid on building materials. The proposed rebate formula is unclear with a lack of clear definition of the basis for rebate. The bill provides that a “new home builder who sells the home may claim up to 30 percent of the sales price as the established value of the materials calculated above.” However, another section of this bill provides for a 1.35 multiplier to the sales price value. There is no reference to the amount of sales tax subject to rebate or whether the rebate would include any municipal sales tax. Under the assumption that the rebate is only related to some calculation of State sales tax on either the actual value of a new home at sale or 1.35 times the actual value of a new home at sale, then the revenue loss to the State General Revenue Fund would generally range between $18 million and $24 million per year based on actual 2024 building permit data. Sales tax on building materials generally account for less than 2 percent of the actual price of a new home.
Additional administrative costs incurred by the State Tax Division would be $59,350 in FY2027 and $22,500 in subsequent fiscal years.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The stated purpose of this bill is to establish a tax rebate for new home construction.
The section heading for §11-27-2 indicates that the refund is intended to be taken against sales tax. However, §11-27-2(a) states, “The tax imposed by this article shall be refunded to any person who buys construction materials to build new housing for residential use (single family homes) for home ownership in the State of West Virginia.” There is no tax imposed under article 27 to be refunded and the remainder of the bill fails to establish a source of the refund.
Subsection (b) of section 2 is ambiguous; the subsection states that the rebate will be “at the conclusion of construction, and upon the home sale.” Read literally, this provision appears to provide that an eligible taxpayer can claim the rebate both when the construction is completed and again when the home is sold. The formula calculating the amount of the rebate incorporates the sale price of the home under §11-27-3(c)(1). Therefore, the home must be first sold in order to calculate the amount of rebate. Because construction is completed before the homes are sold in most cases, it would be impossible to calculate the rebate at the conclusion of construction, but prior to sale of the home. Section 11-27-2(b) may be trying to state that the rebate will be at the conclusion of construction if the new builder uses the home as a primary residence, or upon the sale of the home; but that meaning is not clear from the bill’s language.
Person submitting Fiscal Note: Peter Shirley
Email Address: radfiscal@wv.gov