FISCAL NOTE
Date Requested: January 10, 2024
Time Requested: 10:22 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1339 |
Introduced |
SB184 |
|
|---|
| 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 this bill is to create and authorize a state child and child care tax credit.
Based on our interpretation, the proposed bill would establish a refundable personal income tax credit equivalent to 20 percent of the federal childcare expenses credit claimed or 10 percent of the sum of the federal child and additional child tax credits claimed, whichever is greater. The credit is limited to resident taxpayers with federal adjusted gross income of $100,000 or less. The legislation would be effective for years beginning on and after January 1, 2024.
According to our interpretation, the legislation, if passed, would result in a decrease in General Revenue Fund collections of roughly $42.0 million in FY2025 and subsequent fiscal years. In most cases, the bigger tax credit would be the 10 percent of federal child and additional child tax credit.
Additional administrative costs incurred by the State Tax Department would be $60,000 in FY2024 and $10,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
60,000 |
10,000 |
10,000 |
| Personal Services |
45,000 |
10,000 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
15,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
42,000,000 |
42,000,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the proposed bill would establish a refundable personal income tax credit equivalent to 20 percent of the federal childcare expenses credit claimed or 10 percent of the sum of the federal child and additional child tax credits claimed, whichever is greater. The credit is limited to resident taxpayers with federal adjusted gross income of $100,000 or less. The legislation would be effective for years beginning on and after January 1, 2024.
According to our interpretation, the legislation, if passed, would result in a decrease in General Revenue Fund collections of roughly $42.0 million in FY2025 and subsequent fiscal years. In most cases, the bigger tax credit would be the 10 percent of federal child and additional child tax credit.
Additional administrative costs incurred by the State Tax Department would be $60,000 in FY2024 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create and authorize a state child and child care tax credit.
The bill seeks to establish a child and child care tax credit based on the federal child and child care tax credits. Though both credits are to be created, taxpayers will only be able to utilize one or the other of the credits in a given tax year.
The amount of credit allowed under this section that exceeds the resident individual’s income taxes due is refundable. However, per the legislation, refunds of less than $10 may not be issued due to the administrative cost of processing.
The tax credit is allowed for “resident individuals” who claim either a federal child tax credit or federal child care expenses credit for an eligible child on the individual’s federal tax return. No definition of “resident individuals” is given.
The credit authorized by the legislation may not be claimed by any taxpayer if the federal adjusted gross income for the taxpayer is more than $100,000. No reference is made to the filing status of the “taxpayer”. As the bill reads in the singular, it may lead to attempts by taxpayers filing jointly to each claim a credit if their joint federal adjusted gross income is not more than $200,000.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov