FISCAL NOTE
Date Requested: March 17, 2025
Time Requested: 04:47 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2887 |
Introduced |
HB3447 |
|
|---|
| 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 stated purpose of this bill is to exempt from sales tax certain infant products and hygiene products.
Passage of this bill would add an exemption from sales tax on diapers for adults and children and certain infant products. Based on our interpretation, passage of this bill would result in a loss to the General Revenue Fund collections of roughly $1.5 million in FY2026 and $3.7 million in subsequent fiscal years. Absent an effective date in the bill, provisions of this bill would become effective on January 1, 2026. Municipal sales tax would also have a revenue loss of roughly $0.12 million in FY2026 and $0.29 million in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department are expected to be $1,100 in FY2026.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
1,100 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
1,100 |
0 |
| 2. Estimated Total Revenues |
0 |
-1,500,000 |
-3,700,000 |
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.
Passage of this bill would add an exemption from sales tax on diapers for adults and children and certain infant products. Based on our interpretation, passage of this bill would result in a loss to the General Revenue Fund collections of roughly $1.5 million in FY2026 and $3.7 million in subsequent fiscal years. Absent an effective date in the bill, provisions of this bill would become effective on January 1, 2026. Municipal sales tax would also have a revenue loss of roughly $0.12 million in FY2026 and $0.29 million in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department are expected to be $1,100 in FY2026.
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 exempt from sales tax certain infant products and hygiene products.
The definition in the proposed bill is different from those used in the Streamlined Sales and Use Tax Agreement. Specifically, the bill does not define “diapers” the same as the term is defined in Appendix C, Part II of Article III, Section 327 of the Streamlined Sales and Use Tax Agreement, of which West Virginia is a signatory.
The bill does not contain an internal effective date.
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov