FISCAL NOTE
Date Requested: October 04, 2024
Time Requested: 09:22 AM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 5005 |
Introduced |
SB2025 |
|
|---|
| CBD Subject: |
Governor -- Bills Requested By; Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to authorize up to a 5% additional reduction of the personal income tax rate beginning January 1, 2025.
Per our interpretation, the bill would reduce personal income tax rates effective for tax years beginning on and after January 1, 2025. Beginning January 1, 2025, the following personal income tax rates will be effective: 2.16 percent on the first $10,000 of taxable income ($5,000 for married filing separately); 2.87 percent on taxable income greater than $10,000 and less than or equal to $25,000 ($5,000 and $12,500 for married filing separately); 3.23 percent on taxable income greater than $25,000 and less than or equal to $40,000 ($12,500 and $20,000 for married filing separately); 4.3 percent on taxable income greater than $40,000 and less than or equal to $60,000 ($20,000 and $30,000 for married filing separately; and 4.67 percent on taxable income greater than $60,000 ($30,000 for married filing separately). In addition, effective January 1, 2025, the tax rate for nonresident composite and withholding obligations, and estates and trusts (except non-grantor trusts administered by licensed private trust companies) will be 4.67 percent.
According to our interpretation, the proposed legislation, if passed, would decrease General Revenue Fund collections by roughly $46 million in FY2025, $115 million in FY2026 and by increasing amounts in subsequent fiscal years.
There would be no additional administrative costs incurred by the State Tax Division.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-46,000,000 |
-115,000,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would reduce personal income tax rates effective for tax years beginning on and after January 1, 2025. Beginning January 1, 2025, the following personal income tax rates will be effective: 2.16 percent on the first $10,000 of taxable income ($5,000 for married filing separately); 2.87 percent on taxable income greater than $10,000 and less than or equal to $25,000 ($5,000 and $12,500 for married filing separately); 3.23 percent on taxable income greater than $25,000 and less than or equal to $40,000 ($12,500 and $20,000 for married filing separately); 4.3 percent on taxable income greater than $40,000 and less than or equal to $60,000 ($20,000 and $30,000 for married filing separately; and 4.67 percent on taxable income greater than $60,000 ($30,000 for married filing separately). In addition, effective January 1, 2025, the tax rate for nonresident composite and withholding obligations, and estates and trusts (except non-grantor trusts administered by licensed private trust companies) will be 4.67 percent.
According to our interpretation, the proposed legislation, if passed, would decrease General Revenue Fund collections by roughly $46 million in FY2025, $115 million in FY2026 and by increasing amounts in subsequent fiscal years.
There would be no additional administrative costs incurred by the State Tax Division.
Memorandum
The stated purpose of this bill is to authorize up to a 5% additional reduction of the personal income tax rate beginning January 1, 2025.
There may be some confusion as the bill does not include language that was included as subsection (c) by the passage of HB 5024 during the 2024 regular session. That subsection (c) provides:
(c) Rate of tax on non-grantor trusts administered by licensed private trust
companies. – In the case of non-grantor trusts administered by licensed private
trust companies created pursuant to §11-21-3 of this code.
Arguably, that language may be unnecessary, given mentions of licensed private trust companies in subsections (a) and (c) of the bill; but there may be confusion among taxpayers and practitioners if that language is deleted in this bill after having been inserted so recently.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov