FISCAL NOTE

Date Requested: January 22, 2019
Time Requested: 01:06 PM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2595 Introduced HB2580
CBD Subject: Retirement, 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 state income taxes for state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes. Although the stated purpose is to increase the exemption for retirement income for state and federal retirees, the bill, as written, only increases the decreasing modification from $2,000 to $20,000 for federal retirees beginning with Tax Year 2020. Passage of this bill would reduce General Revenue Fund collections by roughly $22.0 million in FY2021. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. Additional administrative costs incurred by the State Tax Department would be $51,000 in FY2021 and $40,000 in each of the fiscal years thereafter.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 40,000
Personal Services 0 0 40,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


The bill, as written, increases the decreasing modification from $2,000 to $20,000 for federal retirees beginning with Tax Year 2020. Passage of this bill would reduce General Revenue Fund collections by roughly $22.0 million in FY2021. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. Additional administrative costs incurred by the State Tax Department would be $51,000 in FY2021 and $40,000 in each of the fiscal years thereafter.



Memorandum


The stated purpose of this bill is to reduce state income taxes for state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes. The title appears to have a flaw. The bill does not “increase" the modification amount for state retirees as suggested in the title. The bill only increases the modification for federal retirees.



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