This bill amends the West Virginia Code to exempt tips and overtime compensation from being included in the state's adjusted gross income for personal income tax purposes, effective for taxable years beginning on or after January 1, 2027. It defines tips to encompass cash tips, electronic payments, noncash tips, amounts from tip-sharing arrangements, and allocated tips from employers. Overtime compensation, defined as pay for hours worked beyond 40 in a week at a rate of at least one and a half times the regular pay, is also included in this exemption.

Additionally, the bill requires employers to report any amounts earned from tips or overtime compensation when withholding taxes from employee wages, promoting transparency and compliance with the new tax exemptions. The overarching aim of the bill is to stimulate economic development by encouraging workforce participation and supporting the service industry, particularly in tourism. The amendments will apply to all taxable years or portions thereof beginning after June 30, 1996, indicating that the changes will not be retroactive but will take effect for future tax years.

Statutes affected:
Introduced Version: 11-21-12, 11-21-71