West Virginia lawmakers OK bills on income tax cut and child care tax credit
CHARLESTON, W.Va. — Bills aimed at reducing the income tax burden of West Virginia residents are on Governor Jim Justice’s desk.
The state personal income tax would be reduced by 2%. Another proposal would offer a tax credit to help families pay for child care. The Republican governor is expected to sign both proposals after they clear final legislative hurdles Tuesday during a special legislative session called by the Justice Department.
State tax cuts have been a priority for Justice, who is nearing the end of his second term as governor and running for the U.S. Senate. He signed a 21.25% tax cut last year, and that tax cut is expected to pass decrease by another 4% in the new year, according to a trigger in the 2023 law that allows further tax cuts if the state achieves higher-than-expected revenue collections.
Justice had initially pressured the Legislature to consider cutting the tax another 5%, but on Monday changed that proposal to a more conservative cut of 2%.
A 2% personal income tax cut would take effect on the first day of the new year and provide about $46 million to taxpayers. Del. House Finance Committee Chairman Vernon Criss said he would have preferred a 5% tax cut, but no deal could be struck with the Senate to support it.
“I still think we’re on the right track,” he said. “That’s what we all want.”
The money to pay for the tax cut will come from an expiring revenue bond and $27 million in savings, the Justice Department said, from the dissolution of the former Department of Health and Human Resources earlier this year into three new state agencies.
Several Democrats spoke out against the proposal, expressing concern that the Justice Department had not provided details about where the cuts would come from and how the cut could affect state programs. West Virginia has the highest per capita rate of children in foster care in the country.
Democrat Del. Kayla Young said she never voted against a tax cut proposal during her term, but the funding source for this cut concerned her.
“I don’t feel comfortable not knowing where this money is coming from,” she said.
House Minority Leader Sean Hornbuckle said the tax cut will not have a meaningful impact on the budgets of most working-class people in West Virginia — 40 cents a week, or just under $21 a year. He said the trigger system included in the 2023 income tax law is a more responsible approach, and questioned why the governor pushed a further tax cut “out of reach in the 25th hour before the election.”
“Its policy is to deprive children of money,” he said. “And if we’re going to pass a tax cut, I would put it to this body that we — all of us — need to do a little bit more work and make sure the money doesn’t impact children.”
Republican Del. Larry Kump of Berkeley County said he disagreed that a 2% cut wouldn’t make sense for families. He said he both grew up and lives in a working-poor neighborhood and has neighbors who have to make decisions between food and warmth.
“Even a little bit is meaningful. A liter of milk helps a family,” he said. “Anything we can do to reduce the tax burden on our taxpayers is a good thing.”
A child and dependent tax credit passed by the state legislature would allow people to receive a non-refundable credit of approximately $225 to apply to their taxes if they receive the federal child care tax credit, which is approximately $450 per year. About 16,000 families in West Virginia receive the federal child care tax credit.
The credit is expected to generate approximately $4.2 million for state taxpayers.