FISCAL NOTE
Date Requested: February 16, 2026
Time Requested: 04:30 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4154 |
Introduced |
HB5598 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Increases Revenue From Existing Sources, 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 raise the consumer sales and use tax to eight percent and repeal all personal income tax in the state.
Per our interpretation, the bill would increase the general sales and service tax from 6 percent to 8 percent and repeal the Personal Income Tax. The bill does not address the use tax. There is no internal effective date in the bill. Therefore, the changes will be effective January 1, 2027.
According to our interpretation, the legislation, if passed, would decrease General Revenue Fund collection by $587.6 million in FY2027, by $1.57 billion in FY2028, and by increasing amounts in subsequent fiscal years. Separately, the impact of the increase in the State Sales Tax rate would increase collections by $281.3 million in FY2027 and by $690.8 million in FY2028 while the elimination of Personal Income Tax would reduce collections by $868.9 million in FY2027 and $2.26 billion in FY2028. By Statute, $30 million of annual personal income tax collections are dedicated to the Post Employment Benefit Trust Fund each year. Passage of this bill may impact upcoming transfers beginning as early as FY2028. Over the longer term, there would potentially be additional losses associated with Corporations reorganizing as partnerships.
Additional administrative costs incurred by the State Tax Division would be $41,500 in FY2027. However, passage of the bill would eventually eliminate the personal income tax and withholding units of the State Tax Division. Administrative cost reductions by the State Tax Division would be $1.66 million in FY2029 and 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 |
41,500 |
-1,655,500 |
| Personal Services |
0 |
0 |
-1,430,000 |
| Current Expenses |
0 |
0 |
-225,500 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
41,500 |
0 |
| 2. Estimated Total Revenues |
0 |
-587,600,000 |
-1,572,000,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would increase the general sales and service tax from 6 percent to 8 percent and repeal the Personal Income Tax. The bill does not address the use tax. There is no internal effective date in the bill. Therefore, the changes will be effective January 1, 2027.
According to our interpretation, the legislation, if passed, would decrease General Revenue Fund collection by $587.6 million in FY2027, by $1.57 billion in FY2028, and by increasing amounts in subsequent fiscal years. Separately, the impact of the increase in the State Sales Tax rate would increase collections by $281.3 million in FY2027 and by $690.8 million in FY2028 while the elimination of Personal Income Tax would reduce collections by $868.9 million in FY2027 and $2.26 billion in FY2028. By Statute, $30 million of annual personal income tax collections are dedicated to the Post Employment Benefit Trust Fund each year. Passage of this bill may impact upcoming transfers beginning as early as FY2028. Over the longer term, there would potentially be additional losses associated with Corporations reorganizing as partnerships.
Additional administrative costs incurred by the State Tax Division would be $41,500 in FY2027. However, passage of the bill would eventually eliminate the personal income tax and withholding units of the State Tax Division. Administrative cost reductions by the State Tax Division would be $1.66 million in FY2029 and in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to raise the consumer sales and use tax to eight percent and repeal all personal income tax in the state.
The bill repeals Article 21 of Chapter 11 in its entirety, without regard to what effect the repeal will have on other sections of the code that refer to it.
The bill amends W.Va. Code §11-15-3 to change the rate of tax in subsection (b) from 6 percent to 8 percent and change the calculation of tax on fractional parts of a dollar in subsection (c) to reflect the new general rate. The changes to fractional parts of a dollar retains the protocol of using six fractional parts of a dollar instead of updating to eight fractional parts, which tends to skew the application’s proportionality at the lower end of the spectrum (for example, three cents instead of one cent on a sale amount of 16 cents, where if eight fractional parts were used in the calculation, three cents in tax would not be applied until a sale of around 37 cents). This will cause administrative issues.
The bill makes no change to §11-13-3(f), which fixes the sales tax rate on certain mobile homes, The bill does not address whether the use tax in W.Va. Code §11-15A remains at a 6 percent rate.
While reviewing this bill, an apparent oversight regarding a previous amendment to §11-15-3 was noted which may need correction. The proviso at the end of subsection (c) provides: “That beginning January 1, 2024, tax due under this article shall be calculated as provided in this subsection and subsection (d) of this section does not apply to sales made after December 31, 2023.” The language of the proviso was changed in 2021, having previously stated that “beginning the first day of January, two thousand four, tax due under this article shall be calculated as provided in subsection (d) of this subsection and this subsection (c) does not apply to sales made after the thirty-first day of December, two thousand three.”
Subsection (d) (titled “Calculation of tax on fractional parts of a dollar after December 31, 2003”) provides that the calculation of sales tax due on fractional parts of a dollar will involve rounding the product of the tax rate and sale price up or down according to the third decimal point. The Tax Division has applied the calculation as set forth in subsection (d) since 2004. The change of language in the subsection (c) proviso occurred by passage of SB 661 in 2021 and was not noticed at the time.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov