FISCAL NOTE
Date Requested: January 23, 2019
Time Requested: 01:54 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1088 |
Introduced |
SB401 |
|
|---|
| 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 exempt social security income from state income taxation
The bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning on or after January 1, 2019.
According to our interpretation, passage of the bill would reduce General Revenue Fund collections by roughly $92.0 million in FY2020 due to the exclusion of taxable social security benefits from the State Personal Income Tax. The value of the proposed tax exclusion will grow over time as the population ages and the number of individuals receiving social security benefits increases.
The Governor’s official revenue estimate incorporates the assumption that the Legislature would enact the Governor’s proposed bill to exempt taxable social security benefits from state taxation beginning in tax year 2019. Therefore, relative to the Governor’s official revenue estimate, the provisions of the bill would reduce state tax collections by roughly 42.0 million in FY2020.
Additional administrative costs incurred by the State Tax Department would be $51,000 in FY2020 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 |
51,000 |
40,000 |
| Personal Services |
0 |
40,000 |
40,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,000 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-92,000,000 |
0 |
Explanation of above estimates (including long-range effect):
The bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning on or after January 1, 2019.
According to our interpretation, passage of the bill would reduce General Revenue Fund collections by roughly $92.0 million in FY2020 due to the exclusion of taxable social security benefits from the State Personal Income Tax. The value of the proposed tax exclusion will grow over time as the population ages and the number of individuals receiving social security benefits increases.
The Governor’s official revenue estimate incorporates the assumption that the Legislature would enact the Governor’s proposed bill to exempt taxable social security benefits from state taxation beginning in tax year 2019. Therefore, relative to the Governor’s official revenue estimate, the provisions of the bill would reduce state tax collections by roughly 42.0 million in FY2020.
Additional administrative costs incurred by the State Tax Department would be $51,000 in FY2020 and $40,000 in each of the fiscal years thereafter.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov