West Virginia lawmakers have passed bills aimed at reducing the state’s income tax burden, which are now awaiting Governor Jim Justice’s approval. One of the bills would cut the state personal income tax by 2%, while another bill would provide a tax credit to assist families with child care expenses. Governor Justice is expected to sign both proposals into law, as cutting personal income tax has been a priority for him. Last year, he signed a 21.25% tax cut, with an additional 4% reduction scheduled for the new year.
The 2% cut in personal income tax rates would come into effect on January 1st, returning approximately $46 million to taxpayers. While some lawmakers expressed a desire for a more significant 5% tax cut, an agreement could not be reached with the Senate. Funding for the tax cut is coming from various sources, including an expiring revenue bond and savings from restructuring the Department of Health and Human Resources. Some Democrats raised concerns about the lack of details regarding the source of funding and the potential impact on state programs, particularly on children in foster care.
House Minority Leader Sean Hornbuckle expressed doubts about the meaningful impact of a 2% tax cut on working-class West Virginians’ budgets, highlighting that the average savings would be around 40 cents a week or $21 a year. He also questioned the timing of the proposed tax cut before the upcoming election and its potential effects on children. In contrast, Republican Del. Larry Kump emphasized that even a small reduction in the tax burden would be significant for families struggling to make ends meet.
Another aspect of the tax relief package passed by the legislature is a child and dependent tax credit, which would provide a non-refundable credit of approximately $225 for those who receive the federal child care tax credit. This credit is aimed at supporting around 16,000 West Virginia families who currently benefit from the federal program. The state expects to return around $4.2 million to taxpayers through this credit. Overall, the tax relief measures are intended to ease the financial burden on West Virginians and provide some relief for families dealing with child care expenses.
While the tax cut and child care credit have garnered support from some lawmakers, there are also reservations and concerns about the potential impact on state programs and vulnerable populations. Democrats have raised questions about the lack of transparency regarding the funding sources for the tax cut and the overall effectiveness of a 2% reduction. As Governor Justice nears the end of his second term and faces a Senate bid, the passage of these tax relief measures reflects his commitment to reducing the income tax burden on West Virginians. The final decision now rests with Governor Justice, who is expected to sign the bills into law and implement the tax cut and child care credit in the new year.
