FISCAL NOTE
Date Requested: January 12, 2024
Time Requested: 02:00 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1201 |
Introduced |
SB336 |
|
|---|
| CBD Subject: |
|
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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 provide for a one time nonrefundable $25,000 tax credit for those persons who have previously resided in West Virginia for a period of at least 20 years, but who left the state to pursue other employment opportunities.
The tax credit offered in this bill would be allowed for individuals who had been employed in West Virginia for at least ten years, then moved out of state for at least ten years, and then returned to the state on or after January 1, 2024. According to the most recently available Census data, West Virginia has experienced a loss of an average of approximately 2,000 residents to other states each year over the past ten years. However, West Virginia’s net migration was positive over the two most recent years of available data. According to the United States Census Bureau, approximately 43,000 people moved to the state in 2022, compared with the estimated 41,000 people who moved out of West Virginia. Only a very small fraction of those moving to the state would qualify for the personal income tax cut. Any portion of the $25,000 personal income tax credit that is unused may be applied to a future tax year to which this credit applies. No carryback to a prior taxable year is allowed for any unused portion of the credit. The tax credit limit is significantly larger than the average tax liability of West Virginia residents. Given the limited available data concerning net migration to West Virginia, we cannot reasonably estimate the amount of revenue loss associated with this bill.
Additional administrative costs incurred by the Tax Department would be $15,000 in FY2025 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 |
0 |
15,000 |
10,000 |
| Personal Services |
0 |
0 |
10,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
The tax credit offered in this bill would be allowed for individuals who had been employed in West Virginia for at least ten years, then moved out of state for at least ten years, and then returned to the state on or after January 1, 2024. According to the most recently available Census data, West Virginia has experienced a loss of an average of approximately 2,000 residents to other states each year over the past ten years. However, West Virginia’s net migration was positive over the two most recent years of available data. According to the United States Census Bureau, approximately 43,000 people moved to the state in 2022, compared with the estimated 41,000 people who moved out of West Virginia. Only a very small fraction of those moving to the state would qualify for the personal income tax cut. Any portion of the $25,000 personal income tax credit that is unused may be applied to a future tax year to which this credit applies. No carryback to a prior taxable year is allowed for any unused portion of the credit. The tax credit limit is significantly larger than the average tax liability of West Virginia residents. Given the limited available data concerning net migration to West Virginia, we cannot reasonably estimate the amount of revenue loss associated with this bill.
Additional administrative costs incurred by the Tax Department would be $15,000 in FY2025 and $10,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to provide for a one time nonrefundable $25,000 tax credit for those persons who have previously resided in West Virginia for a period of at least 20 years, but who left the state to pursue other employment opportunities.
To qualify for the credit, a taxpayer must be someone who was born in West Virginia or who resided and was employed in West Virginia for a minimum of ten years but has not been a resident of West Virginia for at least ten consecutive years prior to 2024 and became a West Virginia resident again on or after January 1, 2024. How to calculate a year may be problematic, in the case of less-than-full-year residents.
The bill provides that the credit “shall expire and not be authorized or applied for any taxable year after December 31, 2030.” This language could be clearer. It is not clear whether a credit that is earned prior to December 31, 2030, would still be available to be applied after December 31, 2030 (i.e., claimed on a tax form submitted in 2031 for the 2030 tax year), either initially or as a carry forward.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov