FISCAL NOTE

Date Requested: January 18, 2023
Time Requested: 08:06 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2124 Introduced SB209
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 allow resident individuals to deduct medical expenses, not reimbursed by an insurance policy for accident and sickness, as personal income tax deductions. This bill would create a decreasing modification of a taxpayer’s W. Va. adjusted gross income for medical expenses not reimbursed by insurance, to the extent that such expenses are not deducted from the taxpayer’s federal adjusted gross income. IRS Publication 502 contains a list of medical expenses that may be included in figuring the taxpayer’s medical deduction. This list includes artificial limbs, bandages, drug treatment, guide dogs or other service animals, among many other categories of expenditure. The most recent Census data shows that there were 734,235 households in West Virginia as of the 2020 survey. Yearly household out-of-pocket medical costs in West Virginia were approximately $1,222, according to the most recent data. We cannot reasonably provide an accurate estimate of how many taxpayers would take this deduction and the amount of the deductions. However, the revenue decrease from this bill would be significant. Administrative costs would be $103,000 in FY 2025 and $95,000 in subsequent years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2023
Increase/Decrease
(use"-")
2024
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 95,000
Personal Services 0 0 90,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 5,000
2. Estimated Total Revenues 0 0 0


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


This bill would create a decreasing modification of a taxpayer’s W. Va. adjusted gross income for medical expenses not reimbursed by insurance, to the extent that such expenses are not deducted from the taxpayer’s federal adjusted gross income. IRS Publication 502 contains a list of medical expenses that may be included in figuring the taxpayer’s medical deduction. This list includes artificial limbs, bandages, drug treatment, guide dogs or other service animals, among many other categories of expenditure. The most recent Census data shows that there were 734,235 households in West Virginia as of the 2020 survey. Yearly household out-of-pocket medical costs in West Virginia were approximately $1,222, according to the most recent data. We cannot reasonably provide an accurate estimate of how many taxpayers would take this deduction and the amount of the deductions. However, the revenue decrease from this bill would be significant. Administrative costs would be $103,000 in FY 2025 and $95,000 in subsequent years.



Memorandum


The stated purpose of this bill is to allow resident individuals to deduct medical expenses, not reimbursed by an insurance policy for accident and sickness, as personal income tax deductions. The bill incorrectly makes reference to “a deduction when arriving at the taxpayer’s federal adjusted gross income.” The federal deduction for medical expenses is taken after the federal adjusted gross income is calculated. A more accurate reference for purposes of this bill would be to federal taxable income.



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