WEST virginia
legislature
2017 regular session
By
[
to the Committee on Senior Citizen Issues then Finance.
A BILL to amend and
reenact §11-21-12 of the Code of West Virginia, 1931, as amended, relating to
personal income tax; exempting a percentage of social security benefits from
personal income tax based on individual's overall amount of taxable income.
Be it enacted by the
Legislature of West Virginia:
That §11-21-12 of the Code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
PART II. RESIDENTS.
§11-21-12. West Virginia adjusted gross income of
resident individual.
(a) General. -- The
West Virginia adjusted gross income of a resident individual means his or her
federal adjusted gross income as defined in the laws of the United States for
the taxable year with the modifications specified in this section.
(b) Modifications increasing federal adjusted gross
income. -- There shall be added to federal adjusted gross income unless
already included therein the following items:
(1) Interest income on obligations of any state other
than this state or of a political subdivision of any other state unless created
by compact or agreement to which this state is a party;
(2) Interest or dividend income on obligations or
securities of any authority, commission or instrumentality of the United
States, which the laws of the United States exempt from federal income tax but
not from state income taxes;
(3) Any deduction allowed when determining federal
adjusted gross income for federal income tax purposes for the taxable year that
is not allowed as a deduction under this article for the taxable year;
(4) Interest on indebtedness incurred or continued to
purchase or carry obligations or securities the income from which is exempt
from tax under this article, to the extent deductible in determining federal
adjusted gross income;
(5) Interest on a depository institution tax-exempt
savings certificate which is allowed as an exclusion from federal gross income
under Section 128 of the Internal Revenue Code, for the federal taxable year;
(6) The amount of a lump sum distribution for which the
taxpayer has elected under Section 402(e) of the Internal Revenue Code of 1986,
as amended, to be separately taxed for federal income tax purposes; and
(7) Amounts withdrawn from a medical savings account
established by or for an individual under section twenty, article fifteen,
chapter thirty-three of this code or section fifteen, article sixteen of said
chapter that are used for a purpose other than payment of medical expenses, as
defined in those sections.
(c) Modifications reducing federal adjusted gross
income. -- There shall be subtracted from federal adjusted gross income to
the extent included therein:
(1) Interest income on obligations of the United States
and its possessions to the extent includable in gross income for federal income
tax purposes;
(2) Interest or dividend income on obligations or
securities of any authority, commission or instrumentality of the United States
or of the State of West Virginia to the extent includable in gross income for
federal income tax purposes but exempt from state income taxes under the laws
of the United States or of the State of West Virginia, including federal
interest or dividends paid to shareholders of a regulated investment company,
under Section 852 of the Internal Revenue Code for taxable years ending after
June 30, 1987;
(3) Any amount included in federal adjusted gross
income for federal income tax purposes for the taxable year that is not
included in federal adjusted gross income under this article for the taxable
year;
(4) The amount of any refund or credit for overpayment
of income taxes imposed by this state, or any other taxing jurisdiction, to the
extent properly included in gross income for federal income tax purposes;
(5) Annuities, retirement allowances, returns of
contributions and any other benefit received under the West Virginia Public
Employees Retirement System, the West Virginia State Teachers Retirement System
and all forms of military retirement, including regular Armed Forces, Reserves
and National Guard, including any survivorship annuities derived therefrom, to
the extent includable in gross income for federal income tax purposes: Provided,
That notwithstanding any provisions in this code to the contrary this
modification shall be limited to the first $2,000 of benefits received under
the West Virginia Public Employees Retirement System, the West Virginia State
Teachers Retirement System and, including any survivorship annuities derived
therefrom, to the extent includable in gross income for federal income tax
purposes for taxable years beginning after December 31, 1986; and the first
$2,000 of benefits received under any federal retirement system to which Title
4 U.S.C. §111 applies: Provided, however, That the total modification
under this paragraph shall not exceed $2,000 per person receiving retirement
benefits and this limitation shall apply to all returns or amended returns
filed after December 31, 1988;
(6) Retirement income received in the form of pensions
and annuities after December 31, 1979, under any West Virginia police, West
Virginia Firemen's Retirement System or the West Virginia State Police Death,
Disability and Retirement Fund, the West Virginia State Police Retirement
System or the West Virginia Deputy Sheriff Retirement System, including any
survivorship annuities derived from any of these programs, to the extent
includable in gross income for federal income tax purposes;
(7) (A) For taxable years beginning after December 31,
2000, and ending prior to January 1, 2003, an amount equal to two percent
multiplied by the number of years of active duty in the Armed Forces of the
United States of America with the product thereof multiplied by the first
$30,000 of military retirement income, including retirement income from the
regular Armed Forces, Reserves and National Guard paid by the United States or
by this state after December 31, 2000, including any survivorship annuities, to
the extent included in gross income for federal income tax purposes for the
taxable year.
(B) For taxable years beginning after December 31,
2002, the first $20,000 of military retirement income, including retirement
income from the regular Armed Forces, Reserves and National Guard paid by the
United States or by this state after December 31, 2002, including any
survivorship annuities, to the extent included in gross income for federal
income tax purposes for the taxable year.
(C) In the event that any of the provisions of this
subdivision are found by a court of competent jurisdiction to violate either
the Constitution of this state or of the United States, or is held to be
extended to persons other than specified in this subdivision, this subdivision
shall become null and void by operation of law.
(8) For taxable years beginning after December 31,
2017, a percentage of social security benefits received pursuant to Title 42
U.S.C., Chapter 7, based upon the overall gross income of the taxpayer, in
accordance with the following schedule:
(A) For an individual whose taxable income is between
$0 and $50,000, one hundred percent of that individual's social security
benefits shall be subtracted from federal adjusted gross income to the extent
included therein;
(B) For an individual whose taxable income is between
$50,000 and $70,000, eighty percent of that individual's social security
benefits shall be subtracted from federal adjusted gross income to the extent
included therein;
(C) For an individual whose taxable income is between
$70,000 and $80,000, sixty percent of that individual's social security
benefits shall be subtracted from federal adjusted gross income to the extent
included therein;
(D) For an individual whose taxable income is between
$80,000 and $90,000, forty percent of that individual's social security
benefits shall be subtracted from federal adjusted gross income to the extent
included therein;
(E) For an individual whose taxable income is between
$90,000 and $100,000, twenty percent of that individual's social security
benefits shall be subtracted from federal adjusted gross income to the extent
included therein;
(F) For an individual whose taxable income exceeds
$100,000, zero percent, of that individual's social security benefits shall be
subtracted from federal adjusted gross income to the extent included therein.
(8) (9) Federal adjusted gross income in the amount
of $8,000 received from any source after December 31, 1986, by any person who
has attained the age of sixty-five on or before the last day of the taxable
year, or by any person certified by proper authority as permanently and totally
disabled, regardless of age, on or before the last day of the taxable year, to
the extent includable in federal adjusted gross income for federal tax
purposes: Provided, That if a
person has a medical certification from a prior year and he or she is still
permanently and totally disabled, a copy of the original certificate is
acceptable as proof of disability. A
copy of the form filed for the federal disability income tax exclusion is
acceptable: Provided, however, That:
(i) Where the total modification under subdivisions
(1), (2), (5), (6) and (7) of this subsection is $8,000 per person or more, no
deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions
(1), (2), (5), (6) and (7) of this subsection is less than $8,000 per person,
the total modification allowed under this subdivision for all gross income
received by that person shall be limited to the difference between $8,000 and
the sum of modifications under subdivisions (1), (2), (5), (6) and (7) of this
subsection;
(9) (10) Federal adjusted gross income in the
amount of $8,000 received from any source after December 31, 1986, by the
surviving spouse of any person who had attained the age of sixty-five or who
had been certified as permanently and totally disabled, to the extent
includable in federal adjusted gross income for federal tax purposes: Provided, That:
(i) Where the total modification under subdivisions
(1), (2), (5), (6), (7) and (8) of this subsection is $8,000 or more, no
deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions
(1), (2), (5), (6), (7) and (8) of this subsection is less than $8,000 per
person, the total modification allowed under this subdivision for all gross
income received by that person shall be limited to the difference between
$8,000 and the sum of subdivisions (1), (2), (5), (6), (7) and (8) of this
subsection;
(10) (11) Contributions from any source to a medical
savings account established by or for the individual pursuant to section
twenty, article fifteen, chapter thirty-three of this code or section fifteen,
article sixteen of said chapter, plus interest earned on the account, to the
extent includable in federal adjusted gross income for federal tax purposes: Provided, That the amount subtracted
pursuant to this subdivision for any one taxable year may not exceed $2,000
plus interest earned on the account. For
married individuals filing a joint return, the maximum deduction is computed
separately for each individual;
(11) (12) For the 2006 taxable year only, severance
wages received by a taxpayer from an employer as the result of the taxpayer's
permanent termination from employment through a reduction in force and through
no fault of the employee, not to exceed $30,000. For purposes of this subdivision:
(i) The term "severance wages" means any
monetary compensation paid by the employer in
the taxable year as a result of permanent termination
from employment in excess of regular annual wages or regular annual salary;
(ii) The term "reduction in force" means a
net reduction in the number of employees employed by the employer in West
Virginia, determined based on total West Virginia employment of the employer's controlled group;
(iii) The term "controlled group" means one
or more chains of corporations connected through stock ownership with a common
parent corporation if stock possessing at least fifty percent of the voting
power of all classes of stock of each of the corporations is owned directly or
indirectly by one or more of the corporations and the common parent owns
directly stock possessing at least fifty percent of the voting power of all
classes of stock of at least one of the other corporations;
(iv) The term "corporation" means any
corporation, joint-stock company or association and any business conducted by a
trustee or trustees wherein interest or ownership is evidenced by a certificate
of interest or ownership or similar written instrument; and
(12) (13) Any other income which this state is
prohibited from taxing under the laws of the United States.
(d) Modification for West Virginia fiduciary
adjustment. -- There shall be added to or subtracted from federal adjusted
gross income, as the case may be, the taxpayer's share, as beneficiary of an estate or trust, of the
West Virginia fiduciary adjustment determined under section nineteen of this
article.
(e) Partners and S corporation shareholders. --
The amounts of modifications required to be made under this section by a
partner or an S corporation shareholder, which relate to items of income, gain,
loss or deduction of a partnership or an S corporation, shall be determined
under section seventeen of this article.
(f) Husband and wife. -- If husband and wife
determine their federal income tax on a joint return but determine their West
Virginia income taxes separately, they shall determine their West Virginia
adjusted gross incomes separately as if their federal adjusted gross incomes
had been determined separately.
(g) Effective date. -- (1) Changes in the
language of this section enacted in the year 2000 shall apply to taxable years
beginning after December 31, 2000.
(2) Changes in the language of this section enacted in
the year 2002 shall apply to taxable years beginning after December 31, 2002.
NOTE: The purpose of this bill is
to exempt a percentage of social security benefits from personal income tax
based on individual's overall amount of taxable income.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.