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 exempt the first $20,000 of state pensions and social security benefits from West Virginia personal income tax.
The bill, as written, exempts an additional $20,000 of pension income for PERS, the Teachers’ Retirement System and federal retirees. This change would reduce General Revenue Fund collections by roughly $19.1 million in FY2010. The estimate assumes that these new modifications count against the $8,000 income modification for senior citizens. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. The bill does not exempt the first $20,000 of social security benefits as stated in the purpose.
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 |
-19,100,000 |
0 |
Explanation of above estimates (including long-range effect):
The bill, as written, exempts an additional $20,000 of pension income for PERS, the Teachers’ Retirement System and federal retirees. This change would reduce General Revenue Fund collections by roughly $19.1 million in FY2010. The estimate assumes that these new modifications count against the $8,000 income modification for senior citizens. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. The bill does not exempt the first $20,000 of social security benefits as stated in the purpose.
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 exempt the first $20,000 of state pensions and social security benefits from West Virginia personal income tax.
The bill does not exempt the first $20,000 of social security benefits as stated in the purpose. In addition, the bill retains the current subdivision (5) which states that the decreasing modification for “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” is limited to the first $2,000 of benefits received under those listed systems, “notwithstanding any provisions of this code to the contrary.” The bill does not strike this language and proposes a new subdivision (8), allowing for a modification limited to the first $20,000 of such retirement income, as well as benefits received under 4 U.S.C. §111. The bill also leaves intact the current subdivision (8), which provides for a decreasing modification of $8,000 for senior citizens and persons who are totally and permanently disabled.
The language of the bill states that the $20,000 limit applies to all returns filed after December 31, 2007. This conflicts with other dates in the bill.
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us