FISCAL NOTE
Date Requested: January 21, 2026
Time Requested: 04:54 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2699 |
Introduced |
HB4713 |
|
|---|
| 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 exempt cash tips from West Virginia personal income tax.
According to our interpretation, cash tips from any source would be exempt from the State Personal Income Tax. Assuming no behavioral modification on the part of taxpayers and their employers, an income tax exclusion for all tip income would reduce State revenues by approximately $5.0 million per year. If the exclusion is restricted to only cash tips, the reduction in tax revenue would be closer to $1.0 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 Division would be $109,800 in FY2026 and $90,000 per year in FY2027 and thereafter.
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 |
0 |
109,800 |
90,000 |
| Personal Services |
0 |
90,000 |
90,000 |
| Current Expenses |
0 |
3,300 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
-1,000,000 |
-1,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, cash tips from any source would be exempt from the State Personal Income Tax. Assuming no behavioral modification on the part of taxpayers and their employers, an income tax exclusion for all tip income would reduce State revenues by approximately $5.0 million per year. If the exclusion is restricted to only cash tips, the reduction in tax revenue would be closer to $1.0 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 Division would be $109,800 in FY2026 and $90,000 per year in FY2027 and thereafter.
Memorandum
The stated purpose of this bill is to exempt cash tips from West Virginia personal income tax.
This bill does not define “cash tips”, and there is a lack of clarity regarding whether tips charged on a debit or credit card qualify for this proposed tax exemption. The amount of ambiguity and lack of definitions in this bill create administrative difficulty.
Person submitting Fiscal Note: Peter Shirley
Email Address: RADfiscal@wv.gov