Does West Virginia tax tips and overtime?

The federal deduction and the West Virginia deduction are separate questions. Here is where West Virginia actually lands, and why.

How West Virginia builds its tax base

West Virginia starts from your federal adjusted gross income. Both deductions are below-the-line — they reduce federal taxable income but leave AGI untouched — so neither reaches this state's return automatically. Anything you get here had to be legislated separately.

Tips in West Virginia

Still taxed

WV Form IT-140 line 1 is 'Federal Adjusted Gross Income,' and IRC Sec. 224 is below-the-line, so it does not reduce the number West Virginia imports. The 2025 IT-140 Schedule M (modifications increasing/decreasing federal AGI) contains no tips modification and no reference to OBBBA or P.L. 119-21. That affirmative legislation would be required is confirmed by the vehicle chosen for the attempt: SB 460 (2026 RS), 'Establishing no tax on tips or overtime compensation,' proposed amending W. Va. Code Secs. 11-21-12 and 11-21-71 — i.e., WV's modifications to federal AGI. It died in committee (last action: 'S To Finance 01/16/26') and never reached a floor vote. WV's State Treasurer publicly urged lawmakers to enact such an exemption, further indicating none exists.

Source: WV Tax Division, 2025 IT-140 West Virginia Personal Income Tax Forms and Instructions (Form IT-140 line 1; Schedule M); WV Legislature SB 460 (2026 Regular Session) bill status · last reviewed August 24, 2026

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Overtime in West Virginia

Still taxed

Identical mechanism: IT-140 starts at federal AGI, IRC Sec. 225 is below-the-line, and Schedule M provides no overtime subtraction. SB 460 (2026 RS) would have created the exclusion by amending W. Va. Code Sec. 11-21-12 but was referred to Senate Finance on 1/16/2026 and advanced no further; companion HB 4347 likewise did not pass.

Source: WV Legislature, Senate Bill 460 (2026 Regular Session) — 'Establishing no tax on tips or overtime compensation,' Code Affected Sec. 11-21-12, last action 'S To Finance 01/16/26' · last reviewed August 24, 2026

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West Virginia overtime that does not qualify federally

Yes — by coverage, not by daily hours. West Virginia's maximum-hour standard (W. Va. Code Sec. 21-5C-3) requires time-and-a-half for hours over 40 in a seven-consecutive-day workweek, but the WV Division of Labor states it applies ONLY where all of the following hold: the employer is not covered by federal overtime law through interstate commerce or enterprise coverage; fewer than 80% of the workforce performs interstate-commerce duties (state law 'specifically exclude[s] coverage for any employer having 80% (or more) of their employees covered by any federal act relating to maximum hours'); and there are six or more non-exempt employees at one separate, distinct and permanent work location. WV overtime is thus the residual for non-FLSA employers — that premium is not required by FLSA section 7 and does NOT qualify under IRC Sec. 225. There is no daily or 6th/7th-day overtime rule.

Whatever your state does, your payroll taxes do not change

Both deductions reduce income tax only. Social Security and Medicare are still charged on the same wages, in every state.

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