WEST virginia Legislature
2017 regular session
By
[
to the Committee on Finance.
A BILL to amend and
reenact §11-21-12 of
the Code of West Virginia, 1931, as amended, relating to raising the maximum
personal income tax exemption for persons over the age of sixty-five and for
persons who are totally disabled, for the next three years.
Be it enacted by the
Legislature of West Virginia:
That §11-21-12 of the Code of West Virginia, 1931, as
amended, be amended and reenacted to read as follows:
ARTICLE 21.
PERSONAL INCOME TAX.
§11-21-12. West Virginia adjusted gross income of
resident individual.
(a) General. -- The
West Virginia adjusted gross income of a resident individual means his or her
federal adjusted gross income as defined in the laws of the United States for
the taxable year with the modifications specified in this section.
(b) Modifications
increasing federal adjusted gross income. -- There shall be added to
federal adjusted gross income unless already included therein the following
items:
(1) Interest income on
obligations of any state other than this state or of a political subdivision of
any other state unless created by compact or agreement to which this state is a
party;
(2) Interest or dividend
income on obligations or securities of any authority, commission or
instrumentality of the United States, which the laws of the United States
exempt from federal income tax but not from state income taxes;
(3) Any deduction allowed when determining federal adjusted
gross income for federal income tax purposes for the taxable year that is not
allowed as a deduction under this article for the taxable year;
(4) Interest on
indebtedness incurred or continued to purchase or carry obligations or
securities the income from which is exempt from tax under this article, to the
extent deductible in determining federal adjusted gross income;
(5) Interest on a
depository institution tax-exempt savings certificate which is allowed as an
exclusion from federal gross income under Section 128 of the Internal Revenue
Code, for the federal taxable year;
(6) The amount of a lump
sum distribution for which the taxpayer has elected under Section 402(e) of the
Internal Revenue Code of 1986, as amended, to be separately taxed for federal
income tax purposes; and
(7) Amounts withdrawn from a medical savings account
established by or for an individual under section twenty, article fifteen,
chapter thirty-three of this code or section fifteen, article sixteen of said
chapter that are used for a purpose other than payment of medical expenses, as
defined in those sections.
(c) Modifications
reducing federal adjusted gross income. -- There shall be subtracted from
federal adjusted gross income to the extent included therein:
(1) Interest income on
obligations of the United States and its possessions to the extent includable
in gross income for federal income tax purposes;
(2) Interest or dividend
income on obligations or securities of any authority, commission or
instrumentality of the United States or of the State of West Virginia to the
extent includable in gross income for federal income tax purposes but exempt
from state income taxes under the laws of the United States or of the State of
West Virginia, including federal interest or dividends paid to shareholders of
a regulated investment company, under Section 852 of the Internal Revenue Code
for taxable years ending after June 30, 1987;
(3) Any amount included in federal adjusted gross income
for federal income tax purposes for the taxable year that is not included in
federal adjusted gross income under this article for the taxable year;
(4) The amount of any
refund or credit for overpayment of income taxes imposed by this state, or any
other taxing jurisdiction, to the extent properly included in gross income for
federal income tax purposes;
(5) Annuities, retirement allowances, returns of
contributions and any other benefit received under the West Virginia Public
Employees Retirement System, the West Virginia State Teachers Retirement System
and all forms of military retirement, including regular Armed Forces, Reserves and National Guard, including
any survivorship annuities derived therefrom, to the extent includable in gross
income for federal income tax purposes: Provided, That notwithstanding any
provisions in this code to the contrary this modification shall be is
limited to the first $2,000 of benefits received under the West Virginia Public
Employees Retirement System, the West Virginia State Teachers Retirement System
and, including any survivorship annuities derived therefrom, to the extent
includable in gross income for federal income tax purposes for taxable years
beginning after December 31, 1986; and the first $2,000 of benefits received
under any federal retirement system to which Title 4 U.S.C. §111 applies: Provided, however, That the total
modification under this paragraph shall may not exceed $2,000 per
person receiving retirement benefits and this limitation shall apply to all
returns or amended returns filed after December 31, 1988;
(6) Retirement income
received in the form of pensions and annuities after December 31, 1979, under
any West Virginia police, West Virginia Firemen's
Retirement System or the West Virginia State Police Death, Disability and
Retirement Fund, the West Virginia State Police Retirement System or the West
Virginia Deputy Sheriff Retirement System, including any survivorship annuities
derived from any of these programs, to the extent includable in gross income
for federal income tax purposes;
(7) (A) For taxable years beginning after December 31, 2000,
and ending prior to January 1, 2003, an amount equal to two percent multiplied
by the number of years of active duty in the Armed
Forces of the United States of America
with the product thereof multiplied by the first $30,000 of military retirement
income, including retirement income from the regular Armed Forces, Reserves and National Guard paid by the
United States or by this state after December 31, 2000, including any
survivorship annuities, to the extent included in gross income for federal
income tax purposes for the taxable year.
(B) For taxable years beginning
after December 31, 2002, the first $20,000 of military retirement income,
including retirement income from the regular Armed
Forces, Reserves and National Guard paid by the United States or by this state
after December 31, 2002, including any survivorship annuities, to the extent
included in gross income for federal income tax purposes for the taxable year.
(C) In the event that any
of the provisions of this subdivision are found by a court of competent
jurisdiction to violate either the Constitution of this state or of the United
States, or is held to be extended to persons other than specified in this
subdivision, this subdivision shall become null and void by operation of law.
(8) Federal adjusted gross
income in the amount of $8,000 $20,000 received from any source
after December 31, 1986 December 31, 2016, by any person who has
attained the age of sixty-five on or before the last day of the taxable year,
or by any person certified by proper authority as permanently and totally
disabled, regardless of age, on or before the last day of the taxable year, to
the extent includable in federal adjusted gross income for federal tax
purposes: Provided, That if a
person has a medical certification from a prior year and he or she is still
permanently and totally disabled, a copy of the original certificate is
acceptable as proof of disability. A copy of the form filed for the federal disability
income tax exclusion is acceptable: Provided, however, That:
(i) Where the total
modification under subdivisions (1), (2), (5), (6) and (7) of this subsection
is $8,000 $20,000 per person or more, no deduction shall be
is allowed under this subdivision; and
(ii) Where the total
modification under subdivisions (1), (2), (5), (6) and (7) of this subsection
is less than $8,000 $20,000 per person, the total modification
allowed under this subdivision for all gross income received by that person shall
be is limited to the difference between $8,000 $20,000
and the sum of modifications under subdivisions (1), (2), (5), (6) and (7) of
this subsection; and
(iii) The maximum
modification allowed to federal adjusted gross income under this subdivision
shall be implemented by increasing the modification, from $8,000, by $4,000
each calendar year for three consecutive years, beginning with calendar year
2017, until reaching the maximum exemption of $20,000.
(9) Federal adjusted gross
income in the amount of $8,000 $20,000 received from any source
after December 31, 1986 December 31, 2016, by the surviving
spouse of any person who had attained the age of sixty-five or who had been
certified as permanently and totally disabled, to the extent includable in
federal adjusted gross income for federal tax purposes: Provided, That:
(i) Where the total
modification under subdivisions (1), (2), (5), (6), (7) and (8) of this
subsection is $8,000 $20,000 or more, no deduction shall be
is allowed under this subdivision; and
(ii) Where the total
modification under subdivisions (1), (2), (5), (6), (7) and (8) of this
subsection is less than $8,000 $20,000 per person, the total
modification allowed under this subdivision for all gross income received by
that person shall be is limited to the difference between $8,000
$20,000 and the sum of subdivisions (1), (2), (5), (6), (7) and (8) of
this subsection; and
(iii) The maximum
modification allowed to federal adjusted gross income under this subdivision
shall be implemented by increasing the modification, from $8,000, by $4,000
each calendar year for three consecutive years, beginning with calendar year
2017, until reaching the maximum exemption of $20,000.
(10) Contributions from any
source to a medical savings account established by or for the individual
pursuant to section twenty, article fifteen, chapter thirty-three of this code
or section fifteen, article sixteen of said chapter, plus interest earned on
the account, to the extent includable in federal adjusted gross income for
federal tax purposes: Provided,
That the amount subtracted pursuant to this subdivision for any one taxable
year may not exceed $2,000 plus interest earned on the account. For married individuals filing a joint
return, the maximum deduction is computed separately for each individual;
(11) For the 2006 taxable
year only, severance wages received by a taxpayer from an employer as the
result of the taxpayer's permanent termination from employment through a
reduction in force and through no fault of the employee, not to exceed $30,000. For purposes of this subdivision:
(i) The term "severance wages"
means any monetary compensation paid by the employer in the taxable year as a
result of permanent termination from employment in excess of regular annual
wages or regular annual salary;
(ii) The term "reduction in force" means a net reduction in the number of employees employed by the
employer in West Virginia, determined based on total West Virginia employment
of the employer's controlled group;
(iii) The term
"controlled group" means one or more chains of corporations connected
through stock ownership with a common parent corporation if stock possessing at
least fifty percent of the voting power of all classes of stock of each of the
corporations is owned directly or indirectly by one or more of the corporations
and the common parent owns directly stock possessing at least fifty percent of
the voting power of all classes of stock of at least one of the other
corporations;
(iv) The term
"corporation" means any corporation, joint-stock company or
association and any business conducted by a trustee or trustees wherein
interest or ownership is evidenced by a certificate of interest or ownership or
similar written instrument; and
(12) Any other income which
this state is prohibited from taxing under the laws of the United States.
(d) Modification for
West Virginia fiduciary adjustment. -- There shall be added to or
subtracted from federal adjusted gross income, as the case may be, the taxpayer's share, as beneficiary of an estate or trust, of the
West Virginia fiduciary adjustment determined under section nineteen of this
article.
(e) Partners and S
corporation shareholders. -- The amounts of modifications required to be
made under this section by a partner or an S corporation shareholder, which
relate to items of income, gain, loss or deduction of a partnership or an S
corporation, shall be determined under section seventeen of this article.
(f) Husband and wife.
-- If husband and wife determine their federal income tax on a joint return but
determine their West Virginia income taxes separately, they shall determine
their West Virginia adjusted gross incomes separately as if their federal
adjusted gross incomes had been determined separately.
(g) Effective date. --
(1) Changes in the language of this section enacted in the year 2000 shall
apply to taxable years beginning after December 31, 2000.
(2) Changes in the language
of this section enacted in the year 2002 shall apply to taxable years beginning
after December 31, 2002.
(3) Changes in the
language of this section enacted in the year 2017 apply to taxable years
beginning after December 31, 2016.
NOTE: The purpose of this bill is
to raise the maximum personal income tax exemption for persons over the age of
sixty-five and for persons who are totally disabled, for the next three years.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.