FISCAL NOTE
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, exempts the first $20,000 of pension income for PERS, the Teachers’ Retirement System and federal retirees. The increase in this modification from $2,000 to $20,000 would reduce General Revenue Fund collections by roughly $17.7 million in FY2009. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
There would be no additional administrative costs associated with the change in the modification for current tax years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2008
Increase/Decrease
(use"-") |
2009
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
-17,700,000 |
0 |
Explanation of above estimates (including long-range effect):
The bill, as written, exempts the first $20,000 of pension income for PERS, the Teachers’ Retirement System and federal retirees. The increase in this modification from $2,000 to $20,000 would reduce General Revenue Fund collections by roughly $17.7 million in FY2009. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time.
There would be no additional administrative costs associated with the change in the modification for current tax years.
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 proposed amendment would increase the limit on the modification for benefits received under any retirement system covered by §11-21-12(c)(5) to $20,000, effective for taxable years beginning after December 31, 2008 and raises the amount of the total modification allowable to $20,000, effective for taxable years beginning after December 31, 2007. There is an apparent discrepancy in the dates given in the bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us