On March 7, 2023, Gov. Justice signed HB 2526 immediately reducing the income tax in tax year 2023 by an average of 21.25%.
The bill contains provisions for additional annual personal income tax rate cuts in future years beginning as early as 2025 to the extent that actual State revenue growth exceeds consumer inflation. These triggers put West Virginia on a pathway toward complete elimination of the personal income tax.
The bill returns over $750 million to hardworking West Virginians through income tax reductions. Income tax rates are reduced by 21.25% this year. Additional income tax cuts will occur in 2024 through refundable tax credits equal to the amount of car taxes paid to county sheriffs, and half of the amount of tangible personal property taxes paid to the county sheriff for qualified small businesses. Disabled veterans are eligible for an additional income tax credit equal to the amount of property tax paid to the county sheriff on their homestead.
The reduced withholdings and estimated tax payments are projected to return $595 million dollars to West Virginians in calendar year 2023.
The West Virginia State Tax Department has processed approximately 650,000 returns so far this year which represents close to 80% of total filings they expect to receive. They expect to receive 75,000 returns this week with another 75,000 in October from filers who requested an extension.
Since 2017, 23 different West Virginia state tax reductions have been implemented:
- Personal income tax rate reduction of 21.25% effective 1/1/23
- Adoption tax credit increase from $4,000 to $5,000
- Property tax rebate on automobiles effective 1/1/24
- Property tax homeowner rebate for 90%+ disabled military veterans effective 1/1/24
- Property tax rebate equal to 50% of eligible tangible personal property taxes paid by qualified small businesses effective 1/1/24
- Full military pension exclusion from personal income tax effective 1/1/19
- Social security income tax exclusion for those with income under $100,000 married or $50,000 single
- Sales tax exemption for sales of coins to collectors
- Severance tax exemption for limestone and sandstone
- Coal severance tax rate reduced from 5% to 3% on steam coal
- Sales tax exemption for mobility enhancing equipment.
- Severance tax reduction on lower volume oil & gas wells from 5% to 2.5%
- B&O Tax base reduction for coal-fired generation plants to 45% of nameplate capacity
- B&O Tax exemption for merchant coal-fired power plants not subject to regulatory cost recovery
- Coal severance tax rebate credit for investment in coal mines leading to higher coal production.
- Increased tax credit for qualified rehabilitation building investment from 10% to 25%
- Sales tax holiday for back-to-school items during weekend in August
- Personal income tax credit for eligible donation of cars
- Sales tax exemption on gun and safe storage
- Created a sales tax exemption for building materials and an investment tax credit for eligible BuildWV housing projects
- Income tax credits for capital investment in child-care property and operating costs
- Volunteer firefighter personal income tax credit
- Soft Drink Excise Tax repeal effective July 1, 2024
The West Virginia State Tax Department can assist with any questions regarding state taxes. You can contact them here.
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