FISCAL NOTE
Date Requested: January 12, 2024
Time Requested: 04:47 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1975 |
Introduced |
SB347 |
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| 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 fully eliminate state income tax for Social Security benefits received by taxpayers for taxable years beginning in 2024.
According to our interpretation, passage of this bill would exempt all federally taxable Social Security benefits from personal income tax by adding a proviso to §11-21-12(c)(8)(D) allowing the deduction without income restrictions for taxable years beginning on or after January 1, 2025. Under current law, a decreasing modification for Social Security benefits is allowed when the federal adjusted gross income of a married couple filing a joint return does not exceed $100,000, or $50,000 in the case of a single individual or a married individual filing a single return.
Based on our interpretation and updated statistical data and Personal Income Tax rates currently in effect, passage of this bill would reduce General Revenue Fund collections by a minimal amount in FY2025, by 37.7 million in FY2026, and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $61,500 in FY2025 and $45,000 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 |
61,500 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| Current Expenses |
0 |
1,500 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-37,700,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would exempt all federally taxable Social Security benefits from personal income tax by adding a proviso to §11-21-12(c)(8)(D) allowing the deduction without income restrictions for taxable years beginning on or after January 1, 2025. Under current law, a decreasing modification for Social Security benefits is allowed when the federal adjusted gross income of a married couple filing a joint return does not exceed $100,000, or $50,000 in the case of a single individual or a married individual filing a single return.
Based on our interpretation and updated statistical data and Personal Income Tax rates currently in effect, passage of this bill would reduce General Revenue Fund collections by a minimal amount in FY2025, by 37.7 million in FY2026, and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $61,500 in FY2025 and $45,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to fully eliminate state income tax for Social Security benefits received by taxpayers for taxable years beginning in 2024.
The title of the bill contains a defect. The bill title declares that it addresses “exemptions from personal income tax; providing for an exemption for members of certain uniformed services; exempting Social Security benefits from personal income tax; clarifying that tier one railroad retirement benefits are not subject to personal income tax; specifying an effective date; and removing obsolete language.” However, the text of the bill does not address “member of certain uniformed services,” and it does not clarify (or otherwise address) tier one railroad retirement benefits.
The stated purpose of the bill is to “fully eliminate state income tax on Social Security benefits received by taxpayers for taxable years beginning in 2024. However, the bill adds a proviso to paragraph (D) that states “for taxable years beginning on or after January 1, 2025, this deduction is allowed without any income restrictions.” In addition, the language of the proviso incorrectly refers to the decreasing modification as a “deduction.”
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov