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 social security benefits from West Virginia personal income tax.
According to our interpretation, passage of this bill would reduce General Revenue Fund collections by roughly $39.8 million per year due to the exclusion of social security benefits from the State personal income tax. The proposed change takes effect for tax years beginning on or after January 1, 2008. Based upon anticipated estimated tax payment changes, collections would decrease by $10.0 million in Fiscal Year 2008 and by $39.8 million in Fiscal Year 2009. The value of this proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits.
There would be no additional costs to the State Tax Department.
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 |
-10,000,000 |
-39,800,000 |
0 |
Explanation of above estimates (including long-range effect):
Passage of this bill would provide a decreasing modification to remove taxable social security benefits from federal adjusted gross income for purposes of the West Virginia Personal income Tax.
According to our interpretation, passage of this bill would reduce General Revenue Fund collections by at least $39.8 million per year due to the exclusion of social security benefits from the State personal income tax. The proposed change takes effect for tax years beginning on or after January 1, 2008. Based upon anticipated estimated tax payment changes, collections would decrease by $10.0 million in Fiscal Year 2008 and by at least $39.8 million per year, thereafter.
According to IRS Statistics of Income Data for Tax Year 2005, 73,451 West Virginia residents included nearly $626.2 million of social security benefits in adjusted gross income. Taxable social security benefits are expected to rise to roughly $861 million by 2009.
There would be no additional costs to the State Tax Department.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us