Income Taxes Cut 4 Percent, Justice Planning Special Session For Further Cuts

West Virginia residents are expected to receive a 4 percent reduction to their income taxes in 2025, with more cuts potentially on the horizon.

While announcing the cuts at a virtual press briefing Wednesday, Gov. Jim Justice said he plans to call a special session of the West Virginia Legislature this year to discuss further reductions.

“Don’t stop at 4 percent,” he said. “I mean, for crying out loud, let’s bump this thing another 5 [percent].”

The cuts were automatically triggered by a 2023 law, which reduces state income taxes each year the state collects more revenue than it did in 2019, with adjustments for inflation.

The state surpassed its own estimates for revenue collections in the latest fiscal year, with a surplus of more than $826 million.

The state collected 12 percent less revenue this fiscal year than last. But it still surpassed figures from 2019, according to reports from the West Virginia State Budget Office, a staff agency for the governor that oversees budgetary information.

The tax reduction rate will be finalized in August, but Justice said he does not anticipate changes to the figure before then.

Justice said his ultimate goal is “getting rid” of state income taxes, which he has made a focal point of his administration. Signed by Justice, the 2023 law also sliced personal income taxes by more than 21 percent — the largest reduction in state history.

Critics of the cuts say reduced state revenue means less money for infrastructure and social services. The cuts also come as Justice pursues a flat budget for the state, which means avoiding any year-by-year increases in government spending.

“Reduced state investment” means “school districts are facing unprecedented layoffs, with many paring back course offerings, shuttering services for students with learning and behavioral needs and closing schools,” Kelly Allen, executive director of the West Virginia Center on Budget & Policy (WVCBP), wrote in an op-ed last week.

Even some state lawmakers from Justice’s own party have pushed back against the cuts. Senate Finance Chairman Eric Tarr, R-Putnam, told MetroNews earlier this month that the loss of state revenue from income taxes could require “bloody” reductions to state spending.

But Justice has maintained that reducing income taxes stands to benefit every day West Virginians and increase the dollars they can pour back into the state economy as consumers.

On Wednesday, he also denounced Tarr’s assertion that income tax cuts could hurt residents, and described the WVCBP as “liberal and crazy as crazy can be.”

“We know we can do this. Well then, why don’t we do it? Why in the world don’t we do it?” Justice said. “It’s the people’s money. It’s not our money.”

Justice also noted that the new cuts, paired with an additional 5 percent reduction from state lawmakers, would bring the state roughly one-third of the way toward meeting his goal of eliminating personal income taxes altogether.

While Justice still has several months left to call a special session of the Legislature, he would have to do so before his successor assumes the role of governor in January.

Justice did not provide a specific date for the special session Wednesday, but repeatedly emphasized his commitment to doing so.

“I’m calling everybody back in,” he said. “I want them to be able to do another 5 percent.”