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Bill

SB 492

Establishing additional modification reducing federal adjusted gross income relating to taxes on tips and overtime

2026 Regular Session

West Virginia bill creates state income tax deduction for tips and overtime earnings, reducing taxable income for eligible workers.

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WeVote Research Nonpartisan
Bill Summary · SB 492

Legislative bill overview

SB 492 proposes to create a state tax deduction for West Virginia residents on tips and overtime income, reducing their federal adjusted gross income (AGI) used to calculate state tax liability. The bill would allow workers to exclude a portion of tip and overtime earnings from state income tax calculations, effectively lowering their overall tax burden on these income categories.

Why is this important

For service industry workers and those working extended hours, tips and overtime can represent substantial portions of total income. This deduction could provide meaningful tax relief to lower and middle-income workers in West Virginia, though the actual impact depends on the deduction's size and design. It reflects ongoing policy debate about whether to incentivize or provide relief for specific types of labor income.

Potential points of contention

  • Revenue impact: The deduction would reduce state tax revenue, potentially requiring budget adjustments or offsetting revenue measures elsewhere
  • Scope and fairness: Questions about whether tips and overtime deserve special treatment compared to regular wages, and whether this primarily benefits certain industries (hospitality, healthcare, manufacturing)
  • Implementation complexity: Using federal AGI as the baseline requires careful coordination with federal tax code changes and may create administrative challenges for tax compliance

Compiled from official sources — confirm details with the bill’s official record.

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