×

Morrisey lays out plans for personal income tax cuts

West Virginia Gov. Patrick Morrisey said Monday he will ask the Legislature to approve between a 5% and 10% cut in personal income tax rates. (Photo by Steven Allen Adams)

CHARLESTON – With personal income tax cuts going into effect for 2026 in neighboring Kentucky and Ohio, Gov. Patrick Morrisey wants to move faster than West Virginia’s current glidepath for reducing personal income tax rates during the legislative session starting next week.

During his first press conference of the new year Monday afternoon at the State Capitol Building, Morrisey proposed cutting West Virginia’s personal income tax rates by between 5% and 10%.

“As we’re getting closer to the legislative session, I wanted to make clear that one of our top priorities during the session will be tax cuts and tax simplification, and I think that’s important,” Morrisey said.

“West Virginians are still feeling the impact of inflation. They were suffering for a long time. People know that groceries cost more. Gas has (cost) more. Utilities have (cost) more. I think we need to change that,” Morrisey continued. “We need to make sure that we’re doing more to help everyday West Virginians. That’s why I want to cut the income tax.”

West Virginia has a graduated personal income tax for individuals and married couples broken into five brackets, with those earning less than $10,000 paying 2.22%, those earning more than $10,000 paying 2.96%, those earning more than $25,000 paying 3.33%, those earning more than $40,000 paying 4.44%, and those earning more than $60,000 paying 4.82%.

Morrisey was unable to provide estimates for how much his proposed personal income tax cut would return to taxpayers. Using the $2.126 billion in personal income tax collections for fiscal year 2025 ending last July as an example, a 5% personal income tax cut could return as much as $106 million to taxpayers, while a 10% personal income tax could return as much as $212 million.

“Cutting the income tax is going to reward work,” Morrisey said. “It’s going to put more money back in people’s pockets. And it’s going to make our state more affordable and attractive for investment. A lower income tax is going to tell investors that West Virginia is the place to grow their businesses. When businesses choose us over neighboring states, they’re going to strengthen the communities that we have and keep our younger people here at home.”

Personal income tax makes up the majority of the state’s tax collections for the general revenue fund, or 38.5% of the more than $5.5 billion collected in the previous fiscal year.

Through House Bill 2526, passed in 2023, West Virginia cut its personal income tax rates by a combined 21.25% that went into effect retroactive to tax year 2023. Former Gov. Jim Justice and the Legislature passed an additional 2% personal income tax cut in a 2024 special session, which went into effect Jan. 1, 2025. And a formula within HB 2526 that triggers additional income tax rate cuts caused a 4% cut at the beginning of 2025.

HB 2526, amended in 2024, requires the secretary of the Department of Revenue to determine each August whether a personal income tax cut is triggered based on a formula comparing general revenue collections in a previous fiscal year minus severance tax collections compared to the base year of fiscal year 2019 and tied to the non-seasonally adjusted consumer price index. If the general revenue collections minus severance tax collections exceed the adjusted base year, a reduction would be triggered for the second taxable year following the determination. Personal income tax rate reductions would be limited to no more than 10% during a fiscal year.

The Revenue Department determined in August that the state did not hit the personal income tax trigger for tax year 2027. But Morrisey said he was not content to wait to see if the state’s tax collections and economy would trigger a future cut.

Kentucky and Ohio have personal income tax cuts going into effect for the current calendar year. Kentucky, which has a flat rate with triggers aimed at eliminating its personal income tax, saw its rate drop from 4% to 3.5% as of Jan. 1. Ohio now has a flat personal income tax rate of 2.75% on all nonbusiness income more than $26,050 per year. According to the nonpartisan Tax Foundation, eight states are seeing personal income tax reductions this year.

“I want West Virginia to join that list,” Morrisey said. “In this competitive world, we have to keep up with our neighbors and we have to be better. And when Kentucky and Ohio and any other states tries to pass (us) in line, we must double down, and we must continue to try to get lower income tax rates for our citizens.”

According to the Tax Foundation’s 2026 State Tax Competitiveness Index, West Virginia ranked 32nd in the nation, better than Ohio (39th), Pennsylvania (36th) and Maryland (46th). Only Virginia (30th) and Kentucky (25th) ranked better among neighboring states. West Virginia ranked 27th in individual taxes, better than all surrounding states except for Kentucky (25th).

Kelly Allen, executive director of the West Virginia Center for Budget, an organization that advocates for increased investments in public services, argued that cutting personal income tax rates further would reduce the amount of taxpayer dollars to address critical needs.

“Once again, when you look at the overall tax climate, West Virginia is very competitive with our neighbors,” Allen said on social media Monday. “Where we fall short? Funding for public schools, childcare, infrastructure, pay for public employees, health care spending. A further race to the bottom cutting public services to pay for more tax cuts for the wealthy doesn’t do much for families and businesses who are here or ones we want to attract. How are we having a presser on more tax cuts before one addressing unprecedented school closures?”

According to Allen, two-thirds of any cut to state personal income tax rates only benefits the top 20% of households in West Virginia, who already benefit from approximately $2.2 billion annually in state and federal tax cuts.

“To consider more tax cuts for them before addressing school closures, PEIA, and child welfare is unconscionable,” Allen said.

West Virginia has collected more than $2.742 billion in taxes for the general revenue fund six months into fiscal year 2026 that began on July 1, 2025. Those tax collections were 4.9% above projections from the Department of Revenue, providing the state with $128.1 million in surplus tax collections six months into the current fiscal year.

However, December tax collections of $511.3 million were just less than 1% below the $514.5 million revenue estimate. While corporate net income tax and severance tax collections were up, consumer sales and use tax and personal income tax collections were down.

December personal income tax collections of $192.4 million were more than 8% below the $209.6 million revenue estimate. Fiscal year-to-date personal income tax collections remain positive, with $1.07 billion, which was 4.7% above estimates, contributing $47.9 million to the state’s fiscal year-to-date surplus.

Morrisey said he was confident that the state’s current tax collections and economic conditions could handle another 5% to 10% personal income tax cut, citing the balanced general revenue budget and the work he has done with administration officials to hold down spending.

“I think that if you look at the projections – and … we’ve been very good about that being fiscally disciplined, I think we’ve been managing this the right way to deliver on that additional tax cut,” Morrisey said. “At the end of the day, I think we have to start with the premise that this is the people’s money. And the more we can deliver back to them, the better off we are.”

Morrisey also said the general revenue budget he will present to lawmakers on Jan. 14, during his second State of the State address, will not reduce services in order to pay for the proposed tax cut.

“I think what you’ll see is that our budget is going to still deliver on the state’s priorities,” he said.

Morrisey’s tax package will include provisions aligning West Virginia’s tax code with aspects of the federal One Big Beautiful Bill Act to provide targeted relief, structural reforms to the state’s historic rehabilitation tax credit and expansion of the Tourism Development Act tax credit.

Starting at $2.99/week.

Subscribe Today