FISCAL NOTE

Date Requested: February 19, 2021
Time Requested: 11:27 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
2163 Introduced HB2622
CBD Subject:


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 provide a tax credit against West Virginia personal income tax liability in the amount of payments made on student loans; providing the credit may be used in the graduation year; providing for a maximum term of nine years to claim the credit after the year of graduation; establishing definitions; and establishing the Tax Commissioner to require forms, schedules, returns, or filings to claim the credit. This bill would provide for a credit against the West Virginia personal income tax for a graduate with student loans of a qualified institution of higher learning. The annual tax credit is equal to the lesser of one tenth of the principal amount of the graduate’s qualified student loans plus interest paid in the tax year or the amount of principal and interest paid during the tax year, but may not exceed the taxpayer’s personal income tax liability, as calculated under the provisions of this article for the tax year for which the credit is claimed. The State Tax Department does not have sufficient data to determine the amount of principal on a taxpayer’s student loan. As a result, the amount of one tenth of the principal amount of the graduate’s principal and interest amount of student loans cannot accurately be determined. However, if the credit was limited to only student loan interest, the loss to General Revenue Fund would be roughly $4.0 million in the first full year rising to roughly $40.0 million after ten years. The total cost of this proposed tax credit would be substantially greater than $4.0 million in the first year and $40.0 million after ten years. Administrative costs to the State Tax Department would be $61,000 for FY 2022 and $45,000 for subsequent years.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2021
Increase/Decrease
(use"-")
2022
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 61,000 45,000
Personal Services 0 45,000 45,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 1,000 0
Other 0 15,000 0
2. Estimated Total Revenues 0 0 0


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


This bill would provide for a credit against the West Virginia personal income tax for a graduate with student loans of a qualified institution of higher learning. The annual tax credit is equal to the lesser of one tenth of the principal amount of the graduate’s qualified student loans plus interest paid in the tax year or the amount of principal and interest paid during the tax year, but may not exceed the taxpayer’s personal income tax liability, as calculated under the provisions of this article for the tax year for which the credit is claimed. The State Tax Department does not have sufficient data to determine the amount of principal on a taxpayer’s student loan. As a result, the amount of one tenth of the principal amount of the graduate’s principal and interest amount of student loans cannot accurately be determined. However, if the credit was limited to only student loan interest, the loss to General Revenue Fund would be roughly $4.0 million in the first full year rising to roughly $40.0 million after ten years. The total cost of this proposed tax credit would be substantially greater than $4.0 million in the first year and $40.0 million after ten years. Administrative costs to the State Tax Department would be $61,000 for FY 2022 and $45,000 for subsequent years.



Memorandum






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