FISCAL NOTE
Date Requested: February 13, 2026
Time Requested: 01:01 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 4095 |
Introduced |
SB939 |
|
|---|
| 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 is to encourage West Virginia businesses to replace foreign-manufactured goods with goods manufactured in West Virginia through performance-based, time-limited tax incentives that support sustained in-state production, workforce expansion, and long-term economic growth.
Per our interpretation, the bill would establish the West Virginia Reshoring Manufacturing Act (Reshoring Act). “Reshoring activity” is defined as the documented replacement of imported goods with similar goods manufactured by a qualified West Virginia Manufacturer, The Reshoring Act creates the “reshoring tax credit”. Eligible taxpayers may apply for a nonrefundable tax credit based on their “verified initial reshoring value” and/or their “verified continued reshoring activity value”. “Verified initial reshoring value” is defined as the annual dollar value of imported goods replaced with West Virginia-manufactured goods, while “verified continued reshored activity value” is defined as the annual dollar value of repeat purchases of West Virginia-manufactured good that previously replaced imported goods.
The credit percentage for “verified initial reshoring value” is 25 percent while the credit percentage for “verified continued reshoring value” ranges from 20 percent in the 2nd taxable year to 5 percent in the 5th taxable year. The credit may be applied to offset Corporation Net Income Tax or Personal Income Tax liabilities. The tax credit is capped at $1 million per taxpayer per tax year. The West Virginia Office of Economic Development is responsible for determining eligibility for the credit program, qualification of the reshoring activity, and qualification of the West Virginia Manufacturer. The new article would take effect July 1, 2026, and would apply to taxable years including or after that date. The article sunsets on December 31, 2030, unless reauthorized by the Legislature.
According to our interpretation, the credit generated by this bill could be used by a large range of taxpayers subject to either the Corporation Net Income Tax or the Personal Income Tax. “Eligible taxpayer” is defined to include any person or business entity subject to taxation under Chapter 11 that purchases goods for resale, distribution, or use in business operations in West Virginia. The U.S. Census Bureau data on U.S. General Imports of Goods by State indicates that for 2025 West Virginia was the destination state for more than $4.8 billion in imports with $4.6 billion of those imports being classified as Manufactured Commodities. Even a very small level of “reshoring” could result in a significant amount of potential tax credit. Actual credit use would depend more heavily on the amount of state income tax liability of the credit recipient than on the amount of credit available. We are unable to quantify the net revenue impact from this proposal given the unknown variables.
Additional administrative costs incurred by the State Tax Division would be $22,000 in FY2026, $24,150 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 |
22,000 |
24,150 |
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 |
22,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would establish the West Virginia Reshoring Manufacturing Act (Reshoring Act). “Reshoring activity” is defined as the documented replacement of imported goods with similar goods manufactured by a qualified West Virginia Manufacturer, The Reshoring Act creates the “reshoring tax credit”. Eligible taxpayers may apply for a nonrefundable tax credit based on their “verified initial reshoring value” and/or their “verified continued reshoring activity value”. “Verified initial reshoring value” is defined as the annual dollar value of imported goods replaced with West Virginia-manufactured goods, while “verified continued reshored activity value” is defined as the annual dollar value of repeat purchases of West Virginia-manufactured good that previously replaced imported goods.
The credit percentage for “verified initial reshoring value” is 25 percent while the credit percentage for “verified continued reshoring value” ranges from 20 percent in the 2nd taxable year to 5 percent in the 5th taxable year. The credit may be applied to offset Corporation Net Income Tax or Personal Income Tax liabilities. The tax credit is capped at $1 million per taxpayer per tax year. The West Virginia Office of Economic Development is responsible for determining eligibility for the credit program, qualification of the reshoring activity, and qualification of the West Virginia Manufacturer. The new article would take effect July 1, 2026, and would apply to taxable years including or after that date. The article sunsets on December 31, 2030, unless reauthorized by the Legislature.
According to our interpretation, the credit generated by this bill could be used by a large range of taxpayers subject to either the Corporation Net Income Tax or the Personal Income Tax. “Eligible taxpayer” is defined to include any person or business entity subject to taxation under Chapter 11 that purchases goods for resale, distribution, or use in business operations in West Virginia. The U.S. Census Bureau data on U.S. General Imports of Goods by State indicates that for 2025 West Virginia was the destination state for more than $4.8 billion in imports with $4.6 billion of those imports being classified as Manufactured Commodities. Even a very small level of “reshoring” could result in a significant amount of potential tax credit. Actual credit use would depend more heavily on the amount of state income tax liability of the credit recipient than on the amount of credit available. We are unable to quantify the net revenue impact from this proposal given the unknown variables.
Additional administrative costs incurred by the State Tax Division would be $22,000 in FY2026, $24,150 in FY2027 and $22,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to encourage West Virginia businesses to replace foreign-manufactured goods with goods manufactured in West Virginia through performance-based, time-limited tax incentives that support sustained in-state production, workforce expansion, and long-term economic growth.
The title of Section §11-13NN-8 is “Uses of credit; unused credit; limited carry forward; carry back prohibited; expiration and forfeiture of credit.” However, subsection (c) states “No carryback is allowed to a prior taxable year that does not have qualified expenditures for the amount of any unused portion of any annual credit allowance.” The provision regarding carryback is awkwardly worded and appears to conflict with the title of the section. This may cause confusion.
There appears to be an error in §11-13NN-8(b)(1) and (2) which reads:
The full amount of the excess tax credit is used;
The expiration of the second taxable year after the taxable year in which
the expenditures occurred. The tax credit remaining thereafter is forfeited;
Presumably, the word “or” should be placed at the end of subdivision (1) and a period should be used at the end of subsection (2).
The effective date of July 1, 2026, may cause administrative difficulties as the Tax Division and Department of Economic Development will need to update forms and promulgate rules to accommodate the new credit. Furthermore, the bill does not provide criteria or direction on how to determine whether any given good replaces an imported good, which requires the creation of the criteria through rulemaking, therefore increasing the administrative burden.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov