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 and certain pension benefits from West Virginia personal income tax. The bill, as written, increases the modification for retirement income received in pensions and annuities from the Public Employees Retirement System, the West Virginia Teachers Retirement System and the federal retirement system to include all retirement income received from those sources. The bill also increases the modification for military retirees to include all military pension income. In addition, the bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. These changes are effective beginning with the 2015 tax year. Passage of this bill would result in a decrease in General Revenue Fund collections of $112.2 million beginning in FY2016. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. There would be no additional costs to the State Tax Department.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2014
Increase/Decrease
(use"-")
2015
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 0 -11,220,000


Explanation of above estimates (including long-range effect):


The bill, as written, increases the modification for retirement income received in pensions and annuities from the Public Employees Retirement System, the West Virginia Teachers Retirement System and the federal retirement system to include all retirement income received from those sources. The bill also increases the modification for military retirees to include all military pension income. In addition, the bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. These changes are effective beginning with the 2015 tax year. Passage of this bill would result in a decrease in General Revenue Fund collections of $112.2 million beginning in FY2016. The anticipated retirements of members of the baby-boom generation will result in additional escalation of costs over time. There would be no additional costs to the State Tax Department.



Memorandum






    Person submitting Fiscal Note: Mark B. Muchow
    Email Address: Roger.D.Cox@wv.gov