CHARLESTON, W.Va. (WVDN) – State Treasurer Larry Pack is calling on Governor Patrick Morrisey and the state Legislature to join President Donald Trump and pass legislation to eliminate state income taxes on tips and overtime. President Trump championed a policy at the federal level that would allow workers to deduct overtime and qualified tips from the federal tax return. The federal legislation took effect on January 1, 2025.
“President Trump promised to abolish the tax on overtime pay and tips, a centerpiece for his tax policies,” Treasurer Pack said. “The goal was to help blue-collar and service industry workers who often rely on overtime and tips to make ends meet. Combined with the extension of the 2017 Trump tax cuts, President Trump has delivered, and then some, by enacting some of the largest federal tax cuts in history.”
The new federal law now permits employees and self-employed individuals to deduct up to $25,000 annually in qualified tips. The deduction phases out for taxpayers with modified adjusted gross incomes over $150,000 ($300,000 for joint filers). The deduction is available for both itemizing and non-itemizing taxpayers.
Additionally, the federal law allows workers to deduct up to $12,500 annually of the “half” portion of overtime compensation. Similar to wages from tips, the deduction phases out for taxpayers with modified adjusted gross incomes of over $150,000 ($300,000 for joint filers) and is available for both itemized and non-itemizing returns.
“As we see states around us continue to lower their tax obligation on taxpayers, we must do everything in our power to stay competitive. Eliminating tips and overtime from the state income tax will provide relief to hard-working West Virginians,” Treasurer Pack said. “West Virginia is in the best financial shape it has been in my lifetime. We have the money to get this done, so we urge Governor Morrisey and the Legislature to make this item a top priority and make it effective January 1, 2025.”
Treasurer Pack was instrumental in passing the largest tax-cut in state history when he worked for Governor Jim Justice. That historic legislation allows hardworking West Virginians to keep more of their paycheck. The State of West Virginia ended FY 2025 with a surplus of over $338 million.
