FISCAL NOTE
Date Requested: February 08, 2023
Time Requested: 12:09 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3533 |
Introduced |
HB3350 |
|
|---|
| 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 reduce the amount of personal income tax paid by West Virginia taxpayers to $0 for those earning $80,000 or less.
Based on our interpretation, the legislation would amend §11-21-4e to be effective for taxable years beginning on or after January 1, 2024. The legislation amends the Personal Income Tax rates so that there is an effective rate of 0 percent on the first $80,000 of taxable income ($40,000 for married filing separate) and 6.5 percent on taxable income in excess of $80,000 ($40,000 for married filing separate). Though not mentioned in the bill, the tax rate on nonresident composite and withholding obligations and the rate of withholding on gambling winnings would remain at 6.5 percent. The legislation will amend existing Personal Income Tax code, which could cause some confusion regarding tax rates for the periods immediately prior to the effective period of the bill.
According to our interpretation, the proposed legislation would decrease General Revenue Fund collections by roughly $630 million in FY2024, $1.6 billion in FY2025, $1.7 billion in FY2026 and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2025.
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 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-630,000,000 |
-1,600,000,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the legislation would amend §11-21-4e to be effective for taxable years beginning on or after January 1, 2024. The legislation amends the Personal Income Tax rates so that there is an effective rate of 0 percent on the first $80,000 of taxable income ($40,000 for married filing separate) and 6.5 percent on taxable income in excess of $80,000 ($40,000 for married filing separate). Though not mentioned in the bill, the tax rate on nonresident composite and withholding obligations and the rate of withholding on gambling winnings would remain at 6.5 percent. The legislation will amend existing Personal Income Tax code, which could cause some confusion regarding tax rates for the periods immediately prior to the effective period of the bill.
According to our interpretation, the proposed legislation would decrease General Revenue Fund collections by roughly $630 million in FY2024, $1.6 billion in FY2025, $1.7 billion in FY2026 and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $45,000 in FY2025.
Memorandum
The stated purpose of this bill is to reduce the amount of personal income tax paid by West Virginia taxpayers to $0 for those earning $80,000 or less.
The title of the bill is defective. It only references the reduction for individuals, joint filers, heads of household, estates and trusts; and fails to reference the reduction for married individuals filing separately.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov