FISCAL NOTE
Date Requested: March 26, 2025
Time Requested: 03:15 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2095 |
Introduced |
HB2928 |
|
|---|
| 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 create “The Young Professional Tax Credits” for student loans. The bill provides that the credit applies to college graduates from ages 18 to 40 or until the student loan is repaid. The bill also provides for a refundable child care credit.
The provisions of this bill would create two separate credits for taxpayers between ages 18 and 40. There is no definition of “college graduate” in this bill.
This bill would allow for a credit against the state personal income tax for any taxpayer between the ages of 18 and 40 years who has student loan debts. The tax credit is equal to the accumulated amount of interest on the student loan for the taxable year. As an alternative, this bill would allow for a taxpayer, who is a college graduate with no student loan debt, to claim an annual credit of up to $1,000 against the state personal income tax. This credit may be claimed each year until either the taxpayer reaches the age of 40 years or leaves the State of West Virginia, whichever occurs first. We are unable to completely estimate the loss which would result from all the provisions of this bill. However, the revenue loss to General Revenue Fund from the $1,000 credit for college graduates would be more than $100 million per year based on 25 percent of the population between 18 and 40 qualifying for the credit beginning in FY2026.
As written, this bill would also allow for a refundable credit against the state personal income tax for any college graduate between the ages of 18 and 40 years for childcare costs. This credit is equal to the federal deduction for dependent children. However, there is no federal deduction for dependent children. Therefore, there would be no revenue impact from this proposed credit.
Administrative costs would be $65,650 in FY2026 and $47,500 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
65,650 |
47,500 |
| Personal Services |
0 |
47,500 |
47,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
-100,000,000 |
-100,000,000 |
Explanation of above estimates (including long-range effect):
The provisions of this bill would create two separate credits for taxpayers between ages 18 and 40. There is no definition of “college graduate” in this bill.
This bill would allow for a credit against the state personal income tax for any taxpayer between the ages of 18 and 40 years who has student loan debts. The tax credit is equal to the accumulated amount of interest on the student loan for the taxable year. As an alternative, this bill would allow for a taxpayer, who is a college graduate with no student loan debt, to claim an annual credit of up to $1,000 against the state personal income tax. This credit may be claimed each year until either the taxpayer reaches the age of 40 years or leaves the State of West Virginia, whichever occurs first. We are unable to completely estimate the loss which would result from all the provisions of this bill. However, the revenue loss to General Revenue Fund from the $1,000 credit for college graduates would be more than $100 million per year based on 25 percent of the population between 18 and 40 qualifying for the credit beginning in FY2026.
As written, this bill would also allow for a refundable credit against the state personal income tax for any college graduate between the ages of 18 and 40 years for childcare costs. This credit is equal to the federal deduction for dependent children. However, there is no federal deduction for dependent children. Therefore, there would be no revenue impact from this proposed credit.
Administrative costs would be $65,650 in FY2026 and $47,500 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to create “The Young Professional Tax Credits” for student loans. The bill provides that the credit applies to college graduates from ages 18 to 40 or until the student loan is repaid. The bill also provides for a refundable child care credit.
Subsection (a) provides a refundable credit, for tax years beginning on or after January 1, 2025, for college graduates between the ages of 18 and 40, for child care, in an amount equal to the federal deduction for dependent children. The bill does not provide a definition of “child care.”
Furthermore, subsection (b) provides that the student loan interest credit may be claimed until the taxpayer reaches the age of 40 or until all of the loans are repaid, but there is no provision stopping the taxpayer from simply claiming the credit until whichever condition is satisfied later occurs. For example, a 30-year-old taxpayer may pay off their student loans, then continue to claim the credit until the taxpayer is 40 under the current language of subsection (b).
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov