FISCAL NOTE
Date Requested: February 03, 2026
Time Requested: 04:28 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3383 |
Introduced |
HB5078 |
|
|---|
| CBD Subject: |
Taxation |
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|
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 create and authorize a state child tax credit for eligible children.
Per our interpretation, the bill would create a refundable personal income tax credit for residents who claim a federal child tax credit, under Section 24 of the Internal Revenue Code, for an eligible child on their federal tax return. The bill, if passed, would be effective for tax years beginning on and after January 1, 2025.
Per the bill, the credit would be “… 50% of the federal child and dependent care tax credit allowed to the person under the provisions of 26 U.S.C.§21.” The federal child tax credits and the federal child and dependent care tax credit are two different federal credit programs. The federal non-refundable Child Tax Credit may be claimed for qualifying children under the age of 17. For tax years 2025 and 2026 the credit is $2,200 per qualifying child. The federal Additional Child Tax Credit allows for up to $1,700 per child of the $2,200 Child Tax Credit to be refunded, based on income limitations. The federal Child and Dependent Care Credit helps offset costs for care for a qualifying child, under age 13, or other dependent. The amount of credit allowed is based on qualifying costs for care and the taxpayer(s) federal adjusted gross income.
As these two federal credit programs are not aligned, it is not possible to determine the amount of “federal child and dependent care tax credit allowed” which is attributable to residents who were also allowed a federal child tax credit. Therefore, we are unable to provide a reasonable estimate of the impact to the General Revenue Fund, if this bill were to be passed.
For reference purposes, the current child and dependent care credit under W.Va. Code §11-21-26 is based on 50 percent of the federal child and dependent care tax credit allowed. The current cost for that credit program, without any requirement of receiving a federal child tax credit, is roughly $4.0 million per year. The current bill does not seek to repeal or amend the existing child and dependent care credit. Therefore, if this bill passed, it would create a second credit based on the same federal tax credit program.
Additional administrative costs incurred by the State Tax Department would be $23,650 in FY2026 and $22,500 in subsequent fiscal years.
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 |
23,650 |
22,500 |
22,500 |
| Personal Services |
0 |
22,500 |
22,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
1,650 |
0 |
0 |
| Other |
22,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would create a refundable personal income tax credit for residents who claim a federal child tax credit, under Section 24 of the Internal Revenue Code, for an eligible child on their federal tax return. The bill, if passed, would be effective for tax years beginning on and after January 1, 2025.
Per the bill, the credit would be “… 50% of the federal child and dependent care tax credit allowed to the person under the provisions of 26 U.S.C.§21.” The federal child tax credits and the federal child and dependent care tax credit are two different federal credit programs. The federal non-refundable Child Tax Credit may be claimed for qualifying children under the age of 17. For tax years 2025 and 2026 the credit is $2,200 per qualifying child. The federal Additional Child Tax Credit allows for up to $1,700 per child of the $2,200 Child Tax Credit to be refunded, based on income limitations. The federal Child and Dependent Care Credit helps offset costs for care for a qualifying child, under age 13, or other dependent. The amount of credit allowed is based on qualifying costs for care and the taxpayer(s) federal adjusted gross income.
As these two federal credit programs are not aligned, it is not possible to determine the amount of “federal child and dependent care tax credit allowed” which is attributable to residents who were also allowed a federal child tax credit. Therefore, we are unable to provide a reasonable estimate of the impact to the General Revenue Fund, if this bill were to be passed.
For reference purposes, the current child and dependent care credit under W.Va. Code §11-21-26 is based on 50 percent of the federal child and dependent care tax credit allowed. The current cost for that credit program, without any requirement of receiving a federal child tax credit, is roughly $4.0 million per year. The current bill does not seek to repeal or amend the existing child and dependent care credit. Therefore, if this bill passed, it would create a second credit based on the same federal tax credit program.
Additional administrative costs incurred by the State Tax Department would be $23,650 in FY2026 and $22,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create and authorize a state child tax credit for eligible children.
The use of “claims the credit” rather than “allowed [the credit]” is problematic. A taxpayer may claim a federal credit but not be entitled to it or they may “claim” the credit only to have it ultimately disallowed. [Emphasis added.]
The title states, “refundable child or childcare tax credit.” [Emphasis added.] However, the bill only attempts to create a “child tax credit”.
“Dependent care” is not defined in the bill or elsewhere in state law. However, as the credit is premised on the allowed federal tax credit, the federal definition will control. The bill’s credit is linked to the amount allowed to the taxpayer from application of the federal child and dependent care credit. The federal credit includes dependents, and not just children. This may permit a taxpayer to claim the state credit without having a child.
The bill refers to “federal child tax credits” throughout the bill; however, line 17 refers to the “federal child and dependent care credit”. These are two different federal credits; but the bill appears to refer to them interchangeably. The lack of proper terminology will lead to litigation, administrative difficulties and taxpayer confusion.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov