The state Senate Finance Committee chairman continues to consider whether the state could afford another 5% personal income tax, estimated to be about $110 million annually.
Such a cut, pushed by Gov. Jim Justice, would be on top of a 21.25% personal income tax cut that the state has implemented over the past year and an additional 4% cut resulting from economic conditions that trigger the reduction. Justice has suggested he will put the matter on a special session agenda late this month or next month.
Senate Finance Chairman Eric Tarr, R-Putnam, has noted that he is in favor of tax relief policies — but he has expressed caution over whether West Virginia can currently afford to take this extra slice. Tarr has pointed toward financial obligations state government already has up ahead.
Thursday, speaking on MetroNews’ “Talkline,” Tarr said discussions are still underway about the additional tax cut possibility. He questioned whether the state currently has that latitude.
“I’m hesitant to do it without having a revenue swap or having some other reduction in spending that would permit the tax cut,” Tarr said.
Tarr said he’s had discussions with other lawmakers about whether the state could absorb the additional 5% income tax cut right now. Although the state ended the fiscal year with a revenue surplus of about $826 million, officials have already spoken for a big portion of that. What remains is about $589 million.
“If you look at what our obligated revenue changes are for 2026, they’re about $640 million, just a little bit north of that for the year. So that’s either taxes we know are going away or spends that we know are statutorily obligated that we are not making yet,” Tarr said.
“So if you’re looking at a surplus that’s under $600 million and you’re seeing spends already there statutorily at above $600 million then it becomes, well, do you want to bet on the outcome with economic development?”
He expressed more confidence in the trigger already built into the tax cut legislation that is based on the state’s economic performance. “The trigger that says how much we’re going to reduce that income tax correlates directly — almost on a one-to-one basis with the economic growth of West Virginia. So if that economic growth outpaces the rate of inflation then there’s excess money that we would have relative to what we would need, and that results in an income tax reduction.”
Governor Justice has continued to promote the possibility of an additional 5% tax cut and is asked about that possibility at each of his weekly news briefings. Last week, the last time there was a briefing, the governor acknowledged that discussions with leading lawmakers have been challenging.
“I’d say we’ve got a ways to go,” he said July 31. “There’s a lot we’ve got to do.”
Justice described the most recent surplus as $826 million, not taking into account the millions of dollars that lawmakers already accounted for during special session earlier this year.
The governor estimated the tax cut would amount to $135 million.
“Now if we can’t take $135 million of that money and give it back to our people — it’s their money in the first place — then we’re making a big-time mistake,” Justice said last week.
“I think that’s the excuse or the bush we’re hiding behind to be able to keep the money and do some pet projects.”
