By Steven Allen Adams, Parkersburg News and Sentinel
CHARLESTON — The state’s chief financial officer is asking Gov. Patrick Morrisey to call a special session before the end of the year to follow President Donald Trump’s lead and temporarily eliminate income taxes on tips and overtime.
In a press release Tuesday morning, State Treasurer Larry Pack said a special session would be necessary for the West Virginia Legislature to pass a bill to eliminate personal income tax collections on tips and overtime retroactive to Jan. 1.
“As we see states around us continue to lower their tax obligation on taxpayers, we must do everything in our power to stay competitive,” Pack said. “Eliminating tips and overtime from the state income tax will provide relief to hard-working West Virginians.”
Earlier this summer, Congress passed Trump’s One Big Beautiful Bill Act, now called the Working Families Tax Cuts Act. As part of that package, the bill allows workers to deduct up to $25,000 in tips annually, while those who receive qualified overtime compensation can deduct the pay that exceeds their regular rate of pay – the “half” in time-and-a-half – up to $12,500 per individual or $25,000 for joint filers annually.
Self-employed workers can only deduct no more than their net income from a trade or business where the tips were earned. The deduction for both the tips and overtime phases out for taxpayers with modified adjusted gross income over $150,000, or $300,000 for joint filers.
The federal tax cuts are retroactive to Jan. 1 but end in tax year 2028. If West Virginia mirrors the federal law, ending income taxes on tips and overtime could return approximately $25 million to taxpayers, or $75 million over the three-year period. Other estimates place the annual cost to the state closer to $75 million in year one of the three-year plan.
