FISCAL NOTE
Date Requested: February 23, 2021
Time Requested: 03:32 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1184 |
Introduced |
HB2172 |
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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 provide a tax credit against West Virginia personal income tax liability in the amount of the lesser of payments on interest made on student loans or $1,000; providing the credit may be used in the graduation year; providing for a maximum term of nine years to claim the credit after the year of graduation; establishing definitions; and establishing the Tax Commissioner to require forms, schedules, returns, or filing to claim the credit.
The proposed bill provides a tax credit to resident taxpayers that have graduated on or after January 1, 2021. 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 lesser 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. Currently, student loan interest up to $2,500 per taxpayer can be taken as both a federal deduction and an above-the-line State deduction by taxpayers whose income is less than $85,000 ($170,000 for joint taxpayers). The language of this bill would allow taxpayers who met the above criteria to take both an above-the-line deduction and a State tax credit for the interest paid on student loans. The revenue loss from this proposed bill would be $4.0 million in FY 2022. The revenue loss would increase over time to a maximum loss of $40.0 million in the tenth tax year.
Additional administrative costs to the State Tax Department would be $61,000 for FY2022 and $45,000 for subsequent years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2021
Increase/Decrease
(use"-") |
2022
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
61,000 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| 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 |
-4,000,000 |
-40,000,000 |
Explanation of above estimates (including long-range effect):
The proposed bill provides a tax credit to resident taxpayers that have graduated on or after January 1, 2021. 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 lesser 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. Currently, student loan interest up to $2,500 per taxpayer can be taken as both a federal deduction and an above-the-line State deduction by taxpayers whose income is less than $85,000 ($170,000 for joint taxpayers). The language of this bill would allow taxpayers who met the above criteria to take both an above-the-line deduction and a State tax credit for the interest paid on student loans. The revenue loss from this proposed bill would be $4.0 million in FY 2022. The revenue loss would increase over time to a maximum loss of $40.0 million in the tenth tax year.
Additional administrative costs to the State Tax Department would be $61,000 for FY2022 and $45,000 for subsequent years.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov