FISCAL NOTE
Date Requested: February 20, 2025
Time Requested: 04:21 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3013 |
Introduced |
SB549 |
|
|---|
| 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 authorize a personal income tax deduction applicable to qualified tipped wages.
According to our interpretation, in addition to amounts already authorized to be deducted from federal adjusted gross income, all qualified tips received on or after January 1, 2026, would be an authorized modification reducing federal adjusted income for a resident individual taxpayer. This bill defines “qualified tips” as any tips or gratuities in the form of cash, credit card, debit card, or checks that were received by a West Virginia resident taxpayer in the regular course of the taxpayer’s employment.
Assuming no behavioral modification on the parts of taxpayers and their employers, a personal income tax deduction of all qualified tip income would reduce State revenues by approximately $5.0 million per year. Actual costs will likely be higher due to possible conversions of some wage incomes toward greater tip income due to the tax preference.
Additional administrative costs incurred by the State Tax Department would be $16,500 in FY2025, $93,000 in FY2026, and $90,000 per year in FY2027 and subsequent fiscal years.
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 |
16,500 |
93,000 |
90,000 |
| Personal Services |
0 |
90,000 |
90,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
3,000 |
0 |
| Other |
16,500 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-5,000,000 |
-5,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, in addition to amounts already authorized to be deducted from federal adjusted gross income, all qualified tips received on or after January 1, 2026, would be an authorized modification reducing federal adjusted income for a resident individual taxpayer. This bill defines “qualified tips” as any tips or gratuities in the form of cash, credit card, debit card, or checks that were received by a West Virginia resident taxpayer in the regular course of the taxpayer’s employment.
Assuming no behavioral modification on the parts of taxpayers and their employers, a personal income tax deduction of all qualified tip income would reduce State revenues by approximately $5.0 million per year. Actual costs will likely be higher due to possible conversions of some wage incomes toward greater tip income due to the tax preference.
Additional administrative costs incurred by the State Tax Department would be $16,500 in FY2025, $93,000 in FY2026, and $90,000 per year in FY2027 and subsequent fiscal years.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov