FISCAL NOTE
Date Requested: October 07, 2024
Time Requested: 02:19 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 5078 |
Introduced |
HB237 |
|
|---|
| CBD Subject: |
Governor -- Bills Requested By |
|---|
|
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 modify the personal income tax.
According to our interpretation, the provisions of this bill made two substantive changes. In addition, to the automatic 4% triggered tax rate reduction, the provisions of this bill further reduce personal income tax rates by an additional 2% effective January 1, 2025, with all income tax rates decreasing and the top marginal tax rate decreasing from the originally set 4.92% to 4.82% in Tax Year 2025. This change will reduce FY2025 General Revenue Fund collections by roughly $18.4 million and FY2026 General Revenue Fund collections by approximately $46 million with similar reductions in later years. The provisions of this bill also change the rules of the trigger calculation beginning with the August 2025 calculation. Any potential future tax rate reduction triggers will take effect during the second taxable year following the issuance of the notice of trigger rather than the first immediate tax year. This change should have no fiscal impact in the short-term given that the additional 2% income tax cut and other recently enacted tax reductions should greatly reduce the probability of another triggered rate reduction calculation over at least the next year.
There would be no additional administrative costs.
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 |
-18,400,000 |
-46,000,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, the provisions of this bill made two substantive changes. In addition, to the automatic 4% triggered tax rate reduction, the provisions of this bill further reduce personal income tax rates by an additional 2% effective January 1, 2025, with all income tax rates decreasing and the top marginal tax rate decreasing from the originally set 4.92% to 4.82% in Tax Year 2025. This change will reduce FY2025 General Revenue Fund collections by roughly $18.4 million and FY2026 General Revenue Fund collections by approximately $46 million with similar reductions in later years. The provisions of this bill also change the rules of the trigger calculation beginning with the August 2025 calculation. Any potential future tax rate reduction triggers will take effect during the second taxable year following the issuance of the notice of trigger rather than the first immediate tax year. This change should have no fiscal impact in the short-term given that the additional 2% income tax cut and other recently enacted tax reductions should greatly reduce the probability of another triggered rate reduction calculation over at least the next year.
There would be no additional administrative costs.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov