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State tax collections for August are higher than expected, but the pace is expected to cool as the most recently passed personal income tax cuts are fully implemented.
August tax collections were $34 million higher than estimated. When July and August are combined, the state is $46 million ahead.
Personal income tax collections, the largest category in the revenue estimates, were $169 million in August, exceeding the monthly estimate by $15 million. For the fiscal year so far, they are up $26 million. The state revenue department noted in a press release that personal income tax collections are likely to slow as the full effects of the governor’s initiative to lower personal income tax rates by 5% kick in.
In 2023, House Bill 2526 cut personal income taxes by 21.25% and set up a set of triggers for future cuts. The 2026 5% cut was not part of that system. During the August Interim Meetings, Revenue Secretary Eric Nelson told lawmakers that the state would not reach the revenue levels necessary to trigger another cut.
“West Virginia continues to outperform expectations, with revenues running $46 million ahead of estimates just two months into the fiscal year,” Gov. Patrick Morrisey said. “We are proving that we can deliver meaningful tax relief while keeping our state on strong financial footing. We will continue to hold the line on spending, grow our economy, and look for every opportunity to put more money back in the pockets of West Virginians.”
Consumer sales tax collections exceeded the monthly estimate by $4 million with total collections for August reaching $187 million.
Severance tax collections were $45 million in August, beating the estimate by $10 million. They remain below estimate by $2 million, however.
Corporate net income tax collections in August were less than $1 million below estimate. Corporate tax collections continue to trend downward because of provisions in the One Big Beautiful Bill.
Tobacco products tax collections exceeded their estimate by less than $1 million in August. As consumption patterns shift over time away from traditional cigarette products, the state revenue department anticipates this category will continue to decline.