FISCAL NOTE
Date Requested: March 18, 2021
Time Requested: 12:18 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3424 |
Introduced |
SB662 |
|
|---|
| 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 fully eliminate state income tax for Social Security benefits received by taxpayers for taxable years beginning in 2022.
According to our interpretation of this bill, for taxable years beginning on or after January 1, 2022, this bill exempts all Society Security benefits form Personal Income Tax without any income restrictions. Under current law, a decreasing modification for Social Security benefits is allowed when the federal adjusted gross income of a married couple filing a joint return does not exceed $100,000, or $50,000 in the case of a single individual or a married individual filing a single return. Current statute allows 35 percent of the amount of Social Security benefits included in federal adjusted gross income for taxable years beginning on or after January 1, 2020 to be excluded for taxpayers in those income brackets. For taxable years beginning on or after January 1,2021, this reduction increase to 65 percent and on January 1, 2022 it increases to 100 percent.
Passage of this bill would reduce General Revenue Fund collections by roughly $24.8 million in FY2023 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 members of the baby-boomer generation begin receiving Social Security benefits.
Additional administrative costs incurred by the State Tax Department would be $56,500 in FY2023 and $45,000 in each of the fiscal years thereafter.
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 |
56,500 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,500 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
-24,800,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation of this bill, for taxable years beginning on or after January 1, 2022, this bill exempts all Society Security benefits form Personal Income Tax without any income restrictions. Under current law, a decreasing modification for Social Security benefits is allowed when the federal adjusted gross income of a married couple filing a joint return does not exceed $100,000, or $50,000 in the case of a single individual or a married individual filing a single return. Current statute allows 35 percent of the amount of Social Security benefits included in federal adjusted gross income for taxable years beginning on or after January 1, 2020 to be excluded for taxpayers in those income brackets. For taxable years beginning on or after January 1,2021, this reduction increase to 65 percent and on January 1, 2022 it increases to 100 percent.
Passage of this bill would reduce General Revenue Fund collections by roughly $24.8 million in FY2023 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 members of the baby-boomer generation begin receiving Social Security benefits.
Additional administrative costs incurred by the State Tax Department would be $56,500 in FY2023 and $45,000 in each of the fiscal years thereafter.
Memorandum
The stated purpose of this bill is to fully eliminate state income tax for Social Security benefits received by taxpayers for taxable years beginning in 2022.
There is a title defect as the title does not match the note. The title includes “providing for an exemption for members of certain uniformed services; exempting Social Security benefits from personal income tax; clarifying that tier one railroad retirement benefits are not subject to personal income tax; specifying an effective date; and removing obsolete language”. Despite what is indicated in the title, the only change is in the exemption for Social Security benefits.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov