|Date Requested:January 18, 2010
Time Requested:10:49 AM
| FUND(S) |
General Revenue Fund
Sources of Revenue
Legislation creates:Neither Program nor Fund
Effect this measure will have on costs and revenues of state government.
| The stated purpose of this bill is to exclude federal interest income when applying $8,000 income exclusion available to persons age 65 or older and to persons who are permanently and totally disabled regardless of age and making the change retroactive to tax years beginning after December 31, 2000.
Under the provisions of this bill, tax exempt interest earnings from federal obligations would no longer count against the additional $8,000 minimum income exclusion for senior citizens or disabled individuals. Passage of this bill would prospectively reduce General Revenue Fund collections by roughly $800,000 per year beginning in FY2011. The provisions of the bill would apply to tax years beginning after December 31, 2000. Thus, the bill would grant the additional income tax exclusion retroactively for the tax years from 2001 through 2009. This retroactive tax change could potentially reduce General Revenue Fund collections by another $7.2 million over a twelve to fifteen month period beginning in early FY2011.
Due to the bill’s retroactive application, the State Tax Department would incur additional administrative costs of roughly $65,000 next fiscal year.
|Effect of Proposal||Fiscal Year|
|1. Estmated Total Cost||0||40,000||0|
|Repairs and Alterations||0||0||0|
|2. Estimated Total Revenues||0||-8,000,000||-800,000|
3. Explanation of above estimates (including long-range effect):
This bill retroactively increases the maximum level of income exclusion by up to $8,000 ($16,000 on joint returns) for senior citizens and disabled individuals who receive tax exempt interest income from federal obligations. The bill would be effective for tax years beginning after December 31, 2000. Interest from federal obligations would no longer count against the $8,000 minimum income exclusion under the provisions of this bill. An estimated 3,000 to 3,500 individuals would benefit from a lower personal income tax liability due to the enhanced $8,000 income exclusion.
Due to the bill’s retroactive application, the State Tax Department would incur one-time additional administrative costs of roughly $40,000.