FISCAL NOTE

Date Requested: February 10, 2017
Time Requested: 09:04 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1309 Introduced HB1309
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Neither Program nor Fund



Fiscal Note Summary


Effect this measure will have on costs and revenues of state government.


The stated purpose of this bill is to reduce state income taxes for state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes. The bill, as written, increases the decreasing modification for benefits received from federal retirement but does not increase the modification for benefits received from PERS or the Teachers Retirement System. The bill would increase the modification for federal retirees from $2,000 to $20,000 beginning with Tax Year 2018. Passage of this bill would reduce General Revenue Fund collections by roughly $4.1 million in FY2019. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. Additional administrative costs would be $29,000 in FY2019 and $15,000 a year for fiscal years thereafter.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2017
Increase/Decrease
(use"-")
2018
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 0 15,000
Personal Services 0 0 15,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0


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


The bill, as written, increases the decreasing modification for benefits received from federal retirement but does not increase the modification for benefits received from PERS or the Teachers Retirement System. The bill would increase the modification for federal retirees from $2,000 to $20,000 beginning with Tax Year 2018. Passage of this bill would reduce General Revenue Fund collections by roughly $4.1 million in FY2019. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. Additional administrative costs would be $29,000 in FY2019 and $15,000 a year for fiscal years thereafter.



Memorandum


The stated purpose of this bill is to reduce state income taxes for state and federal retirees by increasing the exemption on retirement income in calculating the federal gross income for state personal income tax purposes. The bill does not increase the modification amount for State retirees as suggested in the title of the bill. Also, additional litigation by less favored groups could result in an increase in administrative costs to the State Tax Department.



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