This bill proposes the addition of a new section, 11-21-12o, to the Code of West Virginia, aimed at providing an additional modification to reduce federal adjusted gross income for taxpayers in relation to taxes on tips and overtime. The modification will be applicable for taxable years starting from January 1, 2026, to January 1, 2029, allowing deductions for qualified tips and overtime compensation as defined by the Internal Revenue Code. For nonresidents, only tips and overtime earned from services performed within the state will qualify for this modification.

Furthermore, the bill outlines that starting from January 1, 2029, the modification will continue to apply, with specific annual limits set at $25,000 for qualified tips and $12,500 for qualified overtime compensation. The bill also includes provisions for phasing out these modifications for taxpayers with modified adjusted gross incomes exceeding $150,000, while ensuring that the modifications are available regardless of the type of tax return filed. Overall, the bill aims to provide tax relief for individuals earning tips and overtime, particularly benefiting those within the specified income thresholds.

Statutes affected:
Introduced Version: 11-21-12o