FISCAL NOTE

Date Requested: February 11, 2020
Time Requested: 12:25 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
3202 Introduced HB4891
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Decreases Existing Revenue, Increases Existing Expenses



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


    The stated purpose of the bill is to provide a tax credit against West Virginia personal income tax liability in the amount of the lesser of interest paid on student loans or $1,000.
    
    The proposed bill provides a tax credit that is available to resident taxpayers that have graduated on or after January 1, 2020. The tax credit is applied in the year of graduation from a qualified institution of higher learning and for the next succeeding nine tax years following graduation. The tax credit is the lessor of the interest paid on student loans during the tax year or $1,000, not to exceed the amount of personal income tax liability. Any remaining credit cannot be carried-over to another succeeding tax year nor carried-back to a prior tax year. The student loans must have been used to obtain a baccalaureate degree, graduate degree, or a professional degree from a qualified institution. If the taxpayer has had student loans in default at any time within the previous three years are ineligible. The revenue loss from this proposed bill would be $2.0 million in FY 2021. The revenue loss would increase over time to a maximum loss of $21.0 million in the tenth tax year.
    
    Additional administrative costs to the State Tax Department would be $56,000 for FY2021 and $40,000 for subsequent years.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2020
Increase/Decrease
(use"-")
2021
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 56,000 40,000
Personal Services 0 40,000 40,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 1,000 0
Other 0 15,000 0
2. Estimated Total Revenues 0 -2,000,000 -21,000,000


Explanation of above estimates (including long-range effect):


    The proposed bill provides a tax credit that is available to resident taxpayers that have graduated on or after January 1, 2020. The tax credit is applied in the year of graduation from a qualified institution of higher learning and for the next succeeding nine tax years following graduation. The tax credit is the lessor of the interest paid on student loans during the tax year or $1,000, not to exceed the amount of personal income tax liability. Any remaining credit cannot be carried-over to another succeeding tax year nor carried-back to a prior tax year. The student loans must have been used to obtain a baccalaureate degree, graduate degree, or a professional degree from a qualified institution. If the taxpayer has had student loans in default at any time within the previous three years are ineligible. The revenue loss from this proposed bill would be $2.0 million in FY 2021. The revenue loss would increase over time to a maximum loss of $21.0 million in the tenth tax year.
    
    Additional administrative costs to the State Tax Department would be $56,000 for FY2021 and $40,000 for subsequent years.
    



Memorandum


    



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov