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 social security benefits from personal income
tax.
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(7) Amounts withdrawn from a medical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, any
social security benefits received pursuant to Title 42 U.S.C., Chapter 7.
(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 social security benefits from personal income tax.
Strike-throughs indicate language
that would be stricken from a heading or the present law, and underscoring
indicates new language that would be added.