WEST virginia Legislature
2017 regular session
By
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A BILL to amend and
reenact §11-21-12 of the Code of West Virginia, 1931, as amended, relating to
increasing the maximum personal income tax exemption for persons over the age
of sixty-five and for persons who are totally disabled.
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.
PART I. GENERAL.
§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(7) Amounts withdrawn from a medical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 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 eight
thousand dollars $16,000 received from any source after the
thirty-first day of December, one thousand nine hundred eighty-six 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 eight thousand dollars $16,000
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 eight thousand dollars
$16,000 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 eight thousand dollars $16,000
and the sum of modifications under subdivisions (1), (2), (5), (6) and (7) of
this subsection;
(9) Federal adjusted gross income in the amount of eight
thousand dollars $16,000 received from any source after the
thirty-first day of December, one thousand nine hundred eighty-six 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 eight thousand dollars $16,000
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 eight thousand
dollars $16,000 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 eight thousand dollars $16,000 and
the sum of subdivisions (1), (2), (5), (6), (7) and (8) of this subsection;
(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 is
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, shall 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 from $8,000 to $16,000.
Strike-throughs indicate language
that would be stricken from a heading or the present law and underscoring
indicates new language that would be added.