FISCAL NOTE

Date Requested: March 10, 2025
Time Requested: 04:18 PM

2036	Introduced	HB3284
Agency:	Tax & Revenue Department, WV State
CBD Number:	Version:	Bill Number:	Resolution Number:
CBD Subject:

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 establish the “Stay in State Tax Credit” that allows residents of this state who remain in state after graduating with an undergraduate or associate degree from a state institution to be granted a tax credit for the total cost of tuition and interest for student loans used to obtain their degree. The bill provides this tax credit against personal income tax in West Virginia and is awarded over a 10-year period. The bill provides that employers are also allowed to claim the credit for employees that qualify for the credit. The bill provides that in-state high schools, colleges, and universities are required to inform and assist students with obtaining the tax credit. According to our interpretation, this bill would allow a credit of up to 100 percent of normally scheduled loan payments against Personal Income Tax for student loan payments made by graduates who work in West Virginia. A portion of the credit would be refundable for certain degree programs. In addition, a 100 percent loan payment credit is allowed for employers who make loan payments for their employees. These credits are available for loan repayments for a period of up to ten years. The State Tax Department does not have sufficient information to accurately estimate the amount of credits that would be taken for student loan payments. We are unable to accurately estimate the revenue loss to the General Revenue Fund attributable to passage of this bill, but the loss would be very substantial given that student loans would be effectively paid by the State through the proposed tax credits. Administrative costs to the State Tax Division would be $22,000 in FY 2025, $98,300 in FY 2026, and $95,000 in subsequent fiscal years.

Fiscal Note Detail

Effect of Proposal	Fiscal Year
Effect of Proposal	2025 Increase/Decrease (use"-")	2026 Increase/Decrease (use"-")	Fiscal Year (Upon Full Implementation)
1. Estmated Total Cost	22,000	983,000	95,000
Personal Services	0	95,000	95,000
Current Expenses	0	0	0
Repairs and Alterations	0	0	0
Assets	0	3,300	0
Other	22,000	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, this bill would allow a credit of up to 100 percent of normally scheduled loan payments against Personal Income Tax for student loan payments made by graduates who work in West Virginia. A portion of the credit would be refundable for certain degree programs. In addition, a 100 percent loan payment credit is allowed for employers who make loan payments for their employees. These credits are available for loan repayments for a period of up to ten years. The State Tax Department does not have sufficient information to accurately estimate the amount of credits that would be taken for student loan payments. We are unable to accurately estimate the revenue loss to the General Revenue Fund attributable to passage of this bill, but the loss would be very substantial given that student loans would be effectively paid by the State through the proposed tax credits. West Virginia already offers a tax preference for student loan interest paid. According to available 2022 Tax Year federal tax statistics for West Virginia residents, 16,820 filers claimed total student loan interest deductions of $15,220,000 in their calculation of federal adjusted gross income used for State tax purposes. Administrative costs to the State Tax Division would be $22,000 in FY 2025, $98,300 in FY 2026, and $95,000 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 establish the “Stay in State Tax Credit” that allows residents of this state who remain in state after graduating with an undergraduate or associate degree from a state institution to be granted a tax credit for the total cost of tuition and interest for student loans used to obtain their degree. The bill provides this tax credit against personal income tax in West Virginia and is awarded over a 10-year period. The bill provides that employers are also allowed to claim the credit for employees that qualify for the credit. The bill provides that in-state high schools, colleges, and universities are required to inform and assist students with obtaining the tax credit. The given definitions can be confusing and may be more restrictive than intended. The bill appears to use the terms “taxpayer” and “qualified individual” interchangeably, with neither term defined. A “qualified individual” or “taxpayer” may claim a credit based on loan payments made to a lender with respect to loans that are part of the taxpayer’s financial aid package. The credit is non-refundable except for graduates of STEM (Science, Technology, Engineering and Math) programs. The bill allows an employer who makes payments on behalf of a qualified graduate to qualify for the credit. However, the bill does not designate against which tax an employer could take the credit. The bill contains no effective date, and there is a plethora of dates for qualification throughout the bill. The bill raises other questions. For example, it is implied in parts of the bill that the credit is available for a “qualified individual’s financial aid package” where elsewhere it is implied that the credit may only be taken in an amount referred to as a “principal cap.”

Person submitting Fiscal Note: Mark Muchow
Email Address: radfiscal@wv.gov