HB4347 would amend West Virginia’s personal income tax law to exclude from adjusted gross income two categories of earnings: compensation paid to full-time hourly employees for hours worked over 40 in a week, and all tips and gratuities earned by any employee. The bill is framed as an income tax exemption for overtime pay and tipped income, and it would add these exclusions to the list of subtractions used to calculate West Virginia taxable income.
The overtime exemption would apply beginning with taxable years on or after January 1, 2027, and is limited to full-time hourly waged employees. The tips provision is broader, covering all tips and gratuities earned by any employee, without specifying a wage or hour threshold. The bill does not alter the federal tax code, but it would reduce the amount of income subject to West Virginia personal income tax for affected workers.
Impact
If enacted, HB4347 would directly amend §11-21-12 of the West Virginia Code, the statute governing resident individuals’ adjusted gross income for state income tax purposes. It would create new state-level subtractions from federal adjusted gross income for overtime compensation and tips, thereby lowering taxable income for eligible taxpayers and reducing state income tax liability for those earnings. The bill would affect hourly workers, tipped workers, and state revenue collections, while leaving existing exclusions for retirement income, Social Security, military retirement, and other categories in place.
Sentiment
The available context suggests the bill is generally favorable to workers and framed as a tax relief measure, especially for hourly employees and tipped workers. The caption and purpose statement emphasize removing income tax from overtime work, indicating a pro-worker, pro-paycheck policy goal. No committee debate or recorded votes were provided, so there is no documented opposition or amendment history in the materials supplied.
Contention
The main policy questions raised by the bill are likely to be revenue loss to the state and the scope of the exemption. The overtime exclusion is limited to full-time hourly waged employees, which may prompt questions about why salaried workers, part-time workers, or other forms of extra compensation are excluded. The tips provision is broader and could raise administrative and definitional issues about what counts as a tip or gratuity and how employers would report it. Because no transcripts or votes are included, no specific legislators or stakeholder groups are identified as opposing or supporting these points in the available record.