In FY 2025, West Virginia saw declines in state tax collections for the second year in a row. Coupled with declining gross domestic product (GDP) and anemic job growth, the numbers paint a stark picture for the state’s economy, particularly amid a slowing national economy and significant federal policy changes set to shift hundreds of millions annually in costs onto the state budget. Here is a deeper dive into the numbers.
West Virginia ended FY 2025 with $5.52 billion in General Revenue collections, a decrease of $191 million from FY 2024, and down $964 million from FY 2023. The period between FYs 2023 and 2025 marked the first time since the Great Recession that West Virginia experienced two consecutive years of revenue decline. Meanwhile, economic growth–promised to occur due to the tax cuts–has been slow, and not nearly enough to offset the cost of the tax cuts.
Most of the decline in FY 2025 was due to further cuts to the personal income tax. The deep tax cuts of 2023 led to a steep decline in personal income tax revenue, which fell by $424 million in FY 2024. Additional tax cuts in 2024 led to even more decline, with personal income tax revenue falling by an additional $113 million.
Other major sources of revenue for the state’s budget saw little gains or declines in FY 2025. The sales tax, West Virginia’s second largest source of revenue after the income tax, saw essentially no growth in FY 2025, increasing by less than $5 million, an increase of only 0.26 percent.
The corporate net income tax saw a decline in FY 2025, falling by $89 million, or 19 percent. And after crashing by $577 million in FY 2024, the severance tax saw a small bounce back in FY 2025, increasing by $70 million.
Much of the lack of revenue growth from sources other than the personal income tax can be attributed to a lack of economic growth. Though the personal income tax cuts were promised to promote economic growth, growth has been slow in the state in the two years since the tax cuts were enacted.
Total nonfarm employment growth in West Virginia trailed the nation in FY 2025. While the state saw a 0.6 percent increase in total nonfarm employment, the national rate was nearly twice that, at 1.1 percent. West Virginia had no job growth in the first half of FY 2025.
Overall West Virginia ranked 37th among the 40 states when it came to total nonfarm employment growth in FY 2025, trailing all but one of its neighboring states.
While the national economy shrank to start 2025, West Virginia experienced a steeper decline. Nationally, real (inflation-adjusted) GDP fell by 0.13 percent in the first quarter of 2025, while in West Virginia, real GDP fell by 0.58 percent.
And while the state’s unemployment rate fell from 4.1 percent to 3.7 percent during FY 2025, fewer West Virginians are actually working. The number of unemployed workers in the state fell from 32,200 in June 2024 to 29,000 in June 2025, a decline of 3,200. Rather than falling mainly due to unemployed workers finding work, West Virginia’s unemployment rate fell due to workers leaving the labor force. The number of West Virginians in the labor force dropped from 788,400 in June 2024 to 779,500 in June 2025, a decline of 8,900, dropping the state’s labor force participation rate from 54.9 percent to 54.2 percent.
Falling revenue, weak economic growth, and looming federal cuts to SNAP and Medicaid–amid growing state budgetary pressures–should raise alarms for lawmakers. They should heed these warning signs and avoid doubling down on ineffective and costly tax cuts.
