Following on the heels of a big personal income tax cut, Gov. Jim Justice has proposed three more tax breaks.

West Virginia lawmakers will now need to make a calculation about whether the state can afford to embrace the proposals. The state’s 21.25 personal property tax cut is still taking effect, and a trigger to cut the tax even more is possible in the coming months.

The governor’s new proposals, outlined in his State of the State address, include changes to the state’s income tax on Social Security benefits, a credit for child and dependent care, and a senior citizen property tax credit.

“These tax cuts are about putting West Virginians first,” Justice stated last week.

“We’re continuing to make West Virginia a more affordable place to live, raise a family, and retire, and these proposals demonstrate my commitment to putting real money back in people’s wallets, helping families raise their kids, seniors stay in their homes, and everyone breathe a little easier. I encourage the Legislature to strongly consider these proposals.”

The administration estimated the three tax breaks combined add up to about $50 million.

Each of these proposals, if passed, would be retroactive to Jan. 1, 2024.

Social Security exemption:

A 2019 bill signed into law by the governor featured a three-year phase-in to exempt Social Security income from personal income taxes for most West Virginians, particularly those in lower tax brackets.

This proposal would exempt those in higher brackets from being taxed on Social Security benefits. The bill was introduced in the House of Delegates as HB 4880.

The Justice administration says 50,000 senior households would be affected.

Child and dependent care credit

The Justice administration proposes a credit equal to 50 percent of the allowable federal child and dependent care credit. This was introduced in the House of Delegates as HB 4879.

The administration says 16,000 West Virginia families could be eligible.

Senior citizen property tax credit

This would be for seniors with homestead property taxes and federal adjusted gross income below 200% of the federal poverty guideline.

The proposal would increase the maximum credit amount by 50%. It also would expand eligibility by 50% of the federal poverty guideline.

Concerns

These proposed tax breaks represent priorities that would naturally result in trade offs for state government, said Kelly Allen, executive director of the progressive West Virginia Center for Budget & Policy.

“Every dollar diverted to tax cuts is one we cannot use to pay for Republican-led priorities like supporting our first responders, investing in our underfunded public schools, and giving home health workers a raise after more than a decade,” Allen said.

“And to even consider additional tax cuts before we’ve had the chance to see the full budgetary impacts of last year’s changes on programs that serve seniors and families would be fiscally irresponsible, likely setting up the next governor and legislature for very difficult decisions.”

Advocacy for senior property credit

Delegate John Hardy, vice chairman of the House Finance Committee, has been pushing for the break for senior homeowners with homestead property taxes.

Hardy, R-Berkeley, said the upshot to the state would be $3 million to $5 million.

“This is a very targeted tax break for a very targeted part of our population,” he said in an interview on the House floor. “So although it would be very important to the people who would be receiving this tax refund, it’s not very burdensome to the state’s coffers.”

Hardy’s version of this bill is HB 4865.

Hardy said the proposal would expand on a policy put in place in 2007. Seniors who are eligible for a homestead exemption and who are eligible under the criteria can receive a refund on their real property taxes.

The current criteria is 125% of the poverty level. The latest proposal would be 200% of the poverty level.

“You could have lived in your home for 30 or 40 years, it could have been paid for for 25 years, and you don’t have a home mortgage but you’re living on a fixed income and your real property taxes have risen rapidly due to economic development and the cost of living rapidly rising — and you could in a position where your home taxes can be really burdensome,” Hardy said.

“So this is just the way the state can help some of our most vulnerable population stay in their homes.”