Senate Bill No. 516

(By Senators Harrison, Sprouse, Rowe, Guills, Hunter, Unger, McCabe, Oliverio, Smith, Weeks, Facemyer, Minard, Jenkins, Caldwell, Fanning, White, Sharpe, Ross, Dempsey, Love, Minear, Boley, Edgell and Bowman)

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[Introduced February 13, 2003; referred to the Committee on Finance.]

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A BILL to amend and reenact section ten, article twenty-one, chapter eleven of the code of West Virginia, one thousand nine hundred thirty-one, as amended, relating to personal income tax; and increasing the low-income exclusion.

Be it enacted by the Legislature of West Virginia:

That section ten, 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.


PART I. GENERAL.

 §11-21-10. Low income exclusion.
(a) Earned income exclusion. -- In the case of an eligible taxpayer, effective the first day of January, two thousand three there shall be is allowed as a deduction from federal adjusted gross income the amount of his or her earned income included therein, not to exceed ten eighteen thousand dollars, except that when a husband and wife file separate returns under this article this exclusion shall may not exceed five nine thousand dollars per separate return. Provided, That for the taxable year beginning the first day of January, one thousand nine hundred ninety-six the exclusion provided for in this section shall apply only to earned income received after the thirtieth day of June, one thousand nine hundred ninety-six and the amount excluded shall not exceed fifty percent of the annual low income exclusion amounts set forth in this subsection
(b) "Eligible taxpayer" defined. -- The term "eligible taxpayer" means:
(1) Any unmarried individual and any husband and wife filing a joint return under this article who has or have federal adjusted gross income of ten eighteen thousand dollars or less for the taxable year; or
(2) Any husband or wife filing a separate return under this article who has federal adjusted gross income of five nine thousand dollars or less.
(c) "Earned income" defined. --
(1) The term "earned income" means:
(A) Wages, salaries, tips and other employee compensation; plus
(B) The amount of the taxpayer's net earnings from self-employment for the taxable year (within the meaning of Section 1402 (a) of the Internal Revenue Code), but such net earnings shall be determined with regard to the deduction allowed to the taxpayer under Section 164 of the Internal Revenue Code.
(2) For purposes of this section:
(A) The earned income of an individual shall be computed without regard to any community property laws;
(B) No amount received as pension or annuity shall be taken into account; and
(c) No amount received for services provided by an individual while the individual is an inmate at a penal institution shall may be taken into account.
(d) Taxable year must be full taxable year. -- Except in the case of a taxable year closed by reason of the death of the taxpayer, no credit shall may be allowed under this section in the case of a taxable year covering a period of less than twelve months.

NOTE: The purpose of this bill is to increase the low income exclusion for personal income tax.

Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.