Senate Bill No. 93
(By Senator Prezioso, Edgell, Oliverio, Minard, Walker, Snyder,
Unger, Hunter, Mitchell, Kessler, Plymale, Bowman, Ball, Helmick,
Fanning, Wooton, Anderson, Dittmar, Ross, Love, Dawson, McKenzie,
McCabe, Redd, Boley, Minear, Sprouse, Chafin, Craigo, Tomblin,
Mr. President and Sharpe)
[Introduced January 14, 2000 ; referred to the
Committee on Military; and then to the Committee on Finance.]
A BILL to amend and reenact section twelve, article twenty-one,
chapter eleven of the code of West Virginia, one thousand nine
hundred thirty-one, as amended, relating to exempting military
retirement income from West Virginia personal income tax.
Be it enacted by the Legislature of West Virginia:
That section twelve, article twenty-one, chapter eleven of the
code of West Virginia, one thousand nine hundred thirty-one, 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 in federal adjusted gross income 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 or section fifteen, article sixteen, both of chapter
thirty-three of this code, 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 in federal adjusted gross income:
(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 the
thirtieth day of June, one thousand nine hundred eighty-seven;
(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 two thousand dollars
of benefits received under the West Virginia public employees
retirement system,
and 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 for taxable years
beginning after the thirty-first day of December, one thousand
nine hundred eighty-six; and the first two thousand dollars 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 subdivision shall may not exceed
two thousand dollars per person receiving retirement benefits
under
the West Virginia public employees retirement system and the West Virginia state teachers retirement system and this limitation
shall
apply applies to all returns or amended returns filed after the
last day of December, one thousand nine hundred eighty-eight;
(6) Retirement income received in the form of pensions and
annuities after the thirty-first day of December, one thousand nine
hundred seventy-nine, under any West Virginia police, West Virginia
firemen's firemens' retirement system or the West Virginia
department of public safety state police death, disability and
retirement fund, including any survivorship annuities derived
therefrom, to the extent includable in gross income for federal
income tax purposes;
(7) Military retirement income, whether derived from service
in the regular armed forces, reserves or national guard, including
any survivorship annuities derived therefrom, to the extent
includable in federal adjusted gross income for all taxable
years beginning on and after the first day of January, two thousand
one;
(7) (8) Federal adjusted gross income in the amount of eight
thousand dollars received from any source after the thirty-first
day of December, one thousand nine hundred eighty-six, 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) and (6) of this subsection is eight thousand dollars per person
or more, no deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5) and (6) of this subsection is less than eight thousand dollars
per person, the total modification allowed under this subdivision
for all gross income received by that person shall be limited to
the difference between eight thousand dollars and the sum of
modifications under subdivisions (1), (2), (5) and (6) of this
subsection;
(8) (9) Federal adjusted gross income in the amount of eight
thousand dollars received from any source after the thirty-first day of December, one thousand nine hundred eighty-six, 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) and (7) of this subsection is eight thousand dollars or
more, no deduction shall be allowed under this subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5), (6) and (7) of this subsection is less than eight thousand
dollars per person, the total modification allowed under this
subdivision for all gross income received by that person shall be
limited to the difference between eight thousand dollars and the
sum of subdivisions (1), (2), (5), (6) and (7) of this subsection;
(9) (10) Contributions from any source to a medical savings
account established by or for the individual pursuant to section
twenty, article fifteen or section fifteen, article sixteen,
chapter thirty-three of this code, 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 two thousand dollars plus interest earned on the account.
For married individuals filing a joint return, the maximum
deduction is computed separately for each individual;
(11) Military retirement income, whether derived from
service in the regular armed forces, reserves or national guard,
including any survivorship annuities derived therefrom, to the
extent includable for federal adjusted gross income purposes; and
(10) (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. -- Changes in the language of this section
enacted in the year one thousand nine hundred ninety-six shall
apply to taxable years beginning after the thirty-first day of
December, one thousand nine hundred ninety-five.
NOTE: The purpose of this bill is to exempt income derived
from any and all military retirement from gross income for purposes
of calculating West Virginia personal income tax.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.
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