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CHARLESTON — Although tax revenues are slightly lower than expected, West Virginia Department of Revenue Deputy Secretary Mark Muchow told lawmakers Monday that the state should still finish the fiscal year with positive tax revenue. Muchow on Monday afternoon provided a report on fiscal year 2025 tax collections for the first four months of fiscal year 2025 beginning in July to members of the Joint Standing Committee on Finance. According to the monthly tax revenue report released earlier this month by the state Senate Finance Committee, October tax revenue of $393.6 million was 3.67 percent below the estimate of $408.6 million in tax revenue set by the state Department of Revenue. Revenue for the month was $15 million lower than expected, although October’s tax revenue was nearly 1% higher than the $390.8 million collected in October 2023. Cumulative tax revenue for the four first months of fiscal 2025 that began in July came in at $1.70 billion, just 0.081% below the revenue estimate of $1.71 billion, or 13, $8 million less than estimates. Muchow said that despite these reports, tax revenues for the end of fiscal year 2025, which is the end of June 2025, are still on track to exceed estimates.
“Overall, we are on track this year for our overall revenue, although we are down a little. » Muchow said. “Overall, the numbers are roughly in line with targets.”
Personal income tax revenue for October of $168.5 million was 8.86% lower than the estimate of $184.9 million. Cumulative personal income tax revenue of $701.9 million was 4.55% lower than the estimate of $735.4 million.
“The difference you see this year in the personal income tax numbers for October compared to last year is not related to the income tax cuts. These were fully in place,” Muchow said. “This is related to the fact that we had additional SALT funds last year in the first half of the fiscal year, which is not the case this year.”
SALT refers to the State and Local Tax Deduction Program. Senate Bill 151, passed in 2023, changed how pass-through entities and partnerships pay personal income tax. According to Muchow, the peak in personal income tax collections occurred in April 2023, when the state had collected $2.736 billion. April 2023 was the first month the Tax Division implemented the new tax tables after the passage of the 2023 tax reform package which reduced personal income tax rates by 21, 25%. In October, personal income tax revenue was $2.174 billion.
“The main reason the amount was down from last year was because last year, in the first half of the year…we raised a lot of one-time money related to the SALT program. These are not part of this year’s collections. Muchow said. “The good thing is we will be paying these huge SALT refunds around February of this fiscal year.”
Quarterly distributions to counties and municipalities of severance collections from coal and natural gas production have contributed to severance collections not meeting estimates. Severance pay collections in October were short by $5.7 million while estimates called for collections of $9.8 million. Fiscal year-to-date severance payouts of $68.5 million were 22 percent lower than the estimated revenue of $87.8 million.
“Severance benefits certainly did better than last year by being less negative, but perceptions of severance benefits were a little inconsistent in October,” Muchow said. “So we have a little bit of volatility in the monthly numbers, but we are on track to achieve what we had planned in terms of the monthly personal income tax and its response to tax cuts. »
Lawmakers are closely monitoring tax collections for the current fiscal year as they prepare to help craft the FY 2026 general revenue budget with Gov.-elect Patrick Morrisey during the 2025 legislative session of next year.
Steven Allen Adams can be contacted at [email protected]