FISCAL NOTE
Date Requested: March 02, 2026
Time Requested: 03:25 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2790 |
Comm. Sub. |
SB392 |
|
|---|
| CBD Subject: |
Governor -- Bills Requested By; 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 purpose of the bill is to reduce personal income tax rates and change the taxation of e-cigarettes.
Per our interpretation, the bill would make changes to the taxation of e-cigarettes products, update the definition of e-cigarette, and reduce Personal Income Tax rates by 10 percent.
The bill adds definitions for “closed vapor cartridge” and “open vaping system”. The definition of “open vaping system” also includes “… any liquid solution that is intended to be used with an e-cigarette.” The definition of “e-cigarette” is updated to include liquid mixing kits and their components. The current tax on e-cigarette liquid is eliminated, and two new excise taxes are created. An excise tax is levied on the sale of each closed vapor cartridge, container, or e-cigarette liquid at the rate of $1.20 per cartridge or container. A separate excise tax is levied on the sale of open vaping systems at the rate of 25 cents per milliliter of e-cigarette liquid. The new excise taxes are effective on and after July 1, 2026. Per section W. Va. Code §11-17-4b(c)(2), “The tax will be paid on any and all e-cigarette and e-cigarette liquid coming into the state for the purpose of sale or use in this state on and after July 1, 2026.” This language should exclude any products currently in inventory from being subject to a floor tax.
The bill also amends language under W. Va. Code §11-21-4h, “Future personal income tax reductions”, to delay the evaluation for future triggered income tax reductions to August 15, 2026, and delays the initial applicability date to January 1, 2027. The bill would also reduce current personal income tax rates by 10 percent and reduce the rate of tax on nonresident composite and withholding obligations and lottery winnings to 4.34 percent. The change to personal income tax rates is effective for taxable years beginning on and after January 1, 2026.
According to our interpretation, the proposed changes to the taxation of e-cigarettes would increase General Revenue Fund collections by $20 million in FY2027 and $22 million in subsequent fiscal years. The proposed reduction in Personal Income Tax rates would decrease General Revenue Fund collections by up to $88.2 million in FY2026, $251.9 million in FY2027 and by increasing amounts in subsequent fiscal years. The combined impact of the provisions of the bill would decrease General Revenue collection by up to $88.2 million in FY2026, $231.9 million in FY2027 and by increasing amounts in subsequent fiscal years. This estimate reflects the full impact of a 10 percent personal income tax rate decrease as outlined in the provisions of the bill. However, the impact of the first 5 percent of the personal income tax rate reduction is already included in the Governor’s official revenue estimates.
Additional administrative costs incurred by the State Tax Division would be $44,000 in FY2026, $68,450 in FY2027, and $44,800 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 |
44,000 |
68,450 |
44,800 |
| Personal Services |
0 |
44,800 |
44,800 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
44,000 |
22,000 |
0 |
| 2. Estimated Total Revenues |
-88,200,000 |
-231,900,000 |
-230,000,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would make changes to the taxation of e-cigarettes products, update the definition of e-cigarette, and reduce Personal Income Tax rates by 10 percent.
The bill adds definitions for “closed vapor cartridge” and “open vaping system”. The definition of “open vaping system” also includes “… any liquid solution that is intended to be used with an e-cigarette.” The definition of “e-cigarette” is updated to include liquid mixing kits and their components. The current tax on e-cigarette liquid is eliminated, and two new excise taxes are created. An excise tax is levied on the sale of each closed vapor cartridge, container, or e-cigarette liquid at the rate of $1.20 per cartridge or container. A separate excise tax is levied on the sale of open vaping systems at the rate of 25 cents per milliliter of e-cigarette liquid. The new excise taxes are effective on and after July 1, 2026. Per section W. Va. Code §11-17-4b(c)(2), “The tax will be paid on any and all e-cigarette and e-cigarette liquid coming into the state for the purpose of sale or use in this state on and after July 1, 2026.” This language should exclude any products currently in inventory from being subject to a floor tax.
The bill also amends language under W. Va. Code §11-21-4h, “Future personal income tax reductions”, to delay the evaluation for future triggered income tax reductions to August 15, 2026, and delays the initial applicability date to January 1, 2027. The bill would also reduce current personal income tax rates by 10 percent and reduce the rate of tax on nonresident composite and withholding obligations and lottery winnings to 4.34 percent. The change to personal income tax rates is effective for taxable years beginning on and after January 1, 2026.
According to our interpretation, the proposed changes to the taxation of e-cigarettes would increase General Revenue Fund collections by $20 million in FY2027 and $22 million in subsequent fiscal years. The proposed reduction in Personal Income Tax rates would decrease General Revenue Fund collections by up to $88.2 million in FY2026, $251.9 million in FY2027 and by increasing amounts in subsequent fiscal years. The combined impact of the provisions of the bill would decrease General Revenue collection by up to $88.2 million in FY2026, $231.9 million in FY2027 and by increasing amounts in subsequent fiscal years. This estimate reflects the full impact of a 10 percent personal income tax rate decrease as outlined in the provisions of the bill. However, the impact of the first 5 percent of the personal income tax rate reduction is already included in the Governor’s official revenue estimates.
Additional administrative costs incurred by the State Tax Division would be $44,000 in FY2026, $68,450 in FY2027, and $44,800 in subsequent fiscal years.
Memorandum
Person submitting Fiscal Note: Peter Shirley
Email Address: RADfiscal@wv.gov