FISCAL NOTE
Date Requested: February 12, 2025
Time Requested: 09:30 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1527 |
Introduced |
SB78 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Decreases Existing Revenue, Increases Existing Expenses
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
Summarize in a clear and concise manner what impact this measure will have on costs and revenues of state government.
The stated purpose of this bill is to provide a tax credit against the state corporation net income tax and the state personal income tax for expenditures related to the operation of existing employer-provided or sponsored childcare facilities.
According to our interpretation, the proposed tax credit for an operating childcare facility, when combined with the current childcare tax credit for operating costs related to a childcare facility, cannot exceed 100 percent the tax liability of eligible credit recipients subject to the Personal Income Tax and Corporation Net Income Tax. The current childcare tax credit allows for 50 percent of the cost of operation less any amounts paid by employees. This bill simply increases the current credit for operating a childcare facility from 50 percent to 100 percent by offering a new alternative tax credit without removing existing tax credits. Increasing the tax credits to 100 percent effectively transfers the full cost of qualified activity to the State. The current tax credits became effective as of July 1, 2022. Although there has been interest in these credits, there have been limited claims to date. As structured, the tax credits are anticipated to be claimed by some larger employers, particularly nonprofit corporations.
Passage of this bill would likely yield a reduction in the General Revenue Fund of some significance beginning in FY2026 largely due to the expansion of the current tax credit for operating a childcare facility through the creation of a new alternative tax credit at double the value of the current tax credits.
Additional administrative costs incurred by the State Tax Department would be $11,000 in FY2025 and $49,500 per year in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2025
Increase/Decrease
(use"-") |
2026
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
11,000 |
49,500 |
49,500 |
| Personal Services |
0 |
49,500 |
49,500 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
11,000 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
Please explain increases and decreases in personal services, current expenses, repairs and alterations, assets, other costs and revenues, including assumptions and data sources and delineation between start-up and ongoing costs. Please also include a long-range schedule of costs and revenues if fiscal impact is expected to vary in future years.
According to our interpretation, the proposed tax credit for an operating childcare facility, when combined with the current childcare tax credit for operating costs related to a childcare facility, cannot exceed 100 percent the tax liability of eligible credit recipients subject to the Personal Income Tax and Corporation Net Income Tax. The current childcare tax credit allows for 50 percent of the cost of operation less any amounts paid by employees. This bill simply increases the current credit for operating a childcare facility from 50 percent to 100 percent by offering a new alternative tax credit without removing existing tax credits. Increasing the tax credits to 100 percent effectively transfers the full cost of qualified activity to the State. The current tax credits became effective as of July 1, 2022. Although there has been interest in these credits, there have been limited claims to date. As structured, the tax credits are anticipated to be claimed by some larger employers, particularly nonprofit corporations.
Passage of this bill would likely yield a reduction in the General Revenue Fund of some significance beginning in FY2026 largely due to the expansion of the current tax credit for operating a childcare facility through the creation of a new alternative tax credit at double the value of the current tax credits.
Additional administrative costs incurred by the State Tax Department would be $11,000 in FY2025 and $49,500 per year in subsequent fiscal years.
Memorandum
Please identify any areas of vagueness, technical defects, reasons a bill would not have a fiscal impact, and/or any special issues not captured elsewhere on this form.
The stated purpose of this bill is to provide a tax credit against the state corporation net income tax and the state personal income tax for expenditures related to the operation of existing employer-provided or sponsored childcare facilities.
The title is defective as it references a “recapture process” that is not provided for in the body of the bill. Further, this bill does not contain an effective date. This bill duplicates many of the provisions of two current statutes which provide tax credits to the employer for employee provided or sponsored childcare facilities.
Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov