West Virginia Passes 2% Income Tax Cut and Child Care Tax Credit
Two major tax relief bills are on their way to the desk of Gov. Jim Justice after clearing the final legislative steps during a special session. One bill would reduce the state’s personal income tax by 2%, while the other introduces a tax credit to help families cover child care expenses. Gov. Justice, who is nearing the end of his second term and running for the U.S. Senate, is expected to sign both into law.
Gov. Justice has prioritized income tax cuts throughout his tenure. In 2023, he signed a 21.25% tax cut into law, with an additional 4% reduction set to take effect in January 2025 due to a revenue trigger included in that legislation. Initially pushing for a further 5% cut, Justice scaled back the proposal to a 2% cut earlier this week.
If signed into law, the 2% cut would take effect at the beginning of the new year, returning approximately $46 million to West Virginia taxpayers. Del. Vernon Criss, the House Finance Committee chair, expressed his preference for a larger cut but noted that a compromise with the Senate resulted in the 2% reduction.
The funding for the tax cut will come from savings attributed to the dissolution of the former Department of Health and Human Resources into three new state agencies, as well as an expiring revenue bond.
Some Democratic lawmakers expressed concerns about the transparency of the savings and the potential impact on state programs, especially given West Virginia’s high number of children in foster care. Del. Kayla Young, a Democrat, voiced her discomfort with the lack of details regarding where the $27 million in savings originated.
House Minority Leader Sean Hornbuckle criticized the tax cut for its limited financial impact on working-class families, estimating the average benefit at just $21 per year. He also questioned the timing of the proposal so close to the election.
However, Republican lawmakers like Del. Larry Kump of Berkeley County argued that even a small tax cut would help struggling families, especially those in poor neighborhoods facing tough financial decisions.
In addition to the income tax cut, the Legislature passed a child and dependent care tax credit. The credit, which is non-refundable, will provide around $225 for families who receive the federal child care tax credit. This is expected to benefit roughly 16,000 West Virginia families, returning an estimated $4.2 million to state taxpayers.
With these tax relief measures, Gov. Justice continues his efforts to reduce West Virginians’ tax burdens as he eyes a U.S. Senate seat.
