FISCAL NOTE
Date Requested: February 05, 2016
Time Requested: 02:20 PM |
| Agency: |
Tax Department, State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1314 |
Introduced |
HB4421 |
|
|---|
| CBD Subject: |
Tax |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to provide tax breaks for employers assisting employees paying student loans. It provides tax credits from personal and corporate income taxes and provides a modification reducing federal adjusted gross income for certain student loan payments.
The proposed bill would allow an employer a tax credit against their Personal Income Tax liability and Corporation Net Income Tax liability in the amount of 25 percent of a student loan repayment of principal and interest made by the employer directly to the relevant lender(s) on behalf of each qualified employee for tax years beginning after December 31, 2015. In addition, the proposed bill allows a decreasing modification of up to $5,000 for Personal Income Tax purposes for student loan payments paid by a health care professional in a federally designated health care professional shortage area, a medically underserved area or a federal nursing shortage county as determined by the Secretary of the Department of Health and Human Resources or the Governor.
The State Tax Department does not have sufficient information to accurately estimate the amount of credits or decreasing modifications that would be taken for student loan payments. We are unable to accurately estimate the revenue loss to the General Revenue Fund attributable to passage of this bill, but the loss could be substantial.
Additional administrative costs incurred by the State Tax Department would be $53,700 in FY2017 and $35,100 thereafter.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2016
Increase/Decrease
(use"-") |
2017
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
53,700 |
35,100 |
| Personal Services |
0 |
35,100 |
35,100 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
5,600 |
0 |
| Other |
0 |
13,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The proposed bill would allow an employer a tax credit against their Personal Income Tax liability and Corporation Net Income Tax liability in the amount of 25 percent of a student loan repayment of principal and interest made by the employer directly to the relevant lender(s) on behalf of each qualified employee for tax years beginning after December 31, 2015. In order to qualify for the credit, the minimum student loan repayment must be $800 in the tax year. Per provisions of this proposed bill, the employer is allowed a maximum credit of $450 for each qualified employee for whom the employer makes student loan repayments in the tax year. This credit cannot be claimed for more than three years and no carryforward or carryback of this tax credit is allowed per provisions of this bill.
In addition, the proposed bill allows a decreasing modification of up to $5,000 for Personal Income Tax purposes for student loan payments paid by a health care professional in a federally designated health care professional shortage area, a medically underserved area or a federal nursing shortage county as determined by the Secretary of the Department of Health and Human Resources or the Governor.
The State Tax Department does not have sufficient information to accurately estimate the amount of credits or decreasing modifications that would be taken for student loan payments. We are unable to accurately estimate the revenue loss to the General Revenue Fund attributable to passage of this bill, but the loss could be substantial.
Additional administrative costs incurred by the State Tax Department would be $53,700 in FY2017 and $35,100 thereafter.
Memorandum
The stated purpose of this bill is to provide tax breaks for employers assisting employees paying student loans. It provides tax credits from personal and corporate income taxes and provides a modification reducing federal adjusted gross income for certain student loan payments.
The amount of the tax credit is unclear. Although the bill initially limits the tax credit at 25 percent of a student loan repayment, proposed West Virginia Code §11-21-8i(b) changes the cap to $450 “for each qualified employee for whom the employer makes student loan repayments in the tax year.” The proposed West Virginia Code §11-21-8i(b) also specifies that the student loan repayment must also be at least $800 in the tax year.
The proposed bill requires the “qualified employee” to be employed by the taxpayer for at least 160 hours in West Virginia during the tax year. It is not clear whether the employee has to physically work in West Virginia for 160 hours. It is also not certain whether the employee can be a resident of another state and still be considered a “qualified employee”.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov