WV Legislature Passes Tax Credit to Provide Vehicles for Low Income Workers
A piece of legislation has just passed the West Virginia Legislature which will amend the WV Tax codes to allow tax credits of up to $2000 to taxpayers who donate or sell their reliable used vehicle to a charitable organization who in turn will sell it at reduced cost and at a reduced financing rate it to a working low income family.
The bill, House Bill 4969 passed both houses on March 2nd and is awaiting the expected signature of Governor Jim Justice. According to a press release by the National Consumer Law Center, the newly passed legislation will support a comprehensive program developed by the Good News Mountaineer Garage and the National Consumer Law Center which will:
- Provide low interest rate financing for approved cars to eligible workers in West Virginia:
- Subsidize both the interest rate charged for the financing and the cost of the cars:
- Provide training to the purchasers of the cars in critical financial literacy and car ownership skills.
The tax credit can be claimed by either individual taxpayers who sell their reliably running car to a qualified charity at a reduced price or by used car dealers who sell a vehicle at a reduced price to a qualified low-income worker through a program administered by the qualified charity.
The legislation allows the tax credit to be 50% of the fair market value of the donated vehicle, up to a total of a $2000 tax credit. For dealers, the tax credit is calculated at 50% of the difference between the fair market value of the car and reduced price they actually sell it for to the low-income worker. The dealer’s tax credit also cannot exceed $2000 per vehicle.
Just to clarify, this is a tax credit, not a tax deduction. A tax credit allows a taxpayer to subtract the full amount of that credit from the taxes they owe, thus a $2000 tax credit actually reduces a person’s tax bill by $2000.
The law only allows a total of $300,000 in tax credits per year, so, for example, if each vehicle provided to a low-income worker involved someone claiming the full $2000 tax credit, one hundred and fifty (150) cars would be provided to low income families each year at reduced cost and financing.
The press release explains the purpose of this legislation. The legislature recognized that low income people in WV often cannot afford to buy a reliable car, nor do not have good enough credit to qualify for a car loan. They also recognized that WV has very limited public transportation and, particularly in rural areas, most people have great distances to commute to work, go to medical appointments or even to go grocery shopping. In most of West Virginia, having a reliable car is a necessity. So, this law was designed to help put low income people behind the wheel and back to work so they can earn money, live a happier life, and contribute to society by paying taxes. It is estimated that over five years, if 750 families get these cars and resulting employment, this program will have generated more than 13.5 million dollars in additional wages in the state.
The legislation stipulates that these tax credits will only begin with donations made after December 31, 2020.