FISCAL NOTE
Date Requested: February 24, 2025
Time Requested: 04:11 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2777 |
Introduced |
HB2913 |
|
|---|
| 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.
The stated purpose of this bill is to repeal the non-refundable child tax credit and create and authorize a refundable child tax credit.
Per our interpretation, the bill would repeal the current “Child and dependent care credit” under W. Va. Code §11-21-26 and create a child tax credit. The bill authorizes a refundable personal income tax credit for residents who are allowed a federal child tax credit for an eligible child on their federal return. The amount of the credit is $1,000 per eligible child. The federal credit allowed can be for either the Federal “Child and other Dependent tax credit” or “Additional child credit.”
The bill, if passed, would be effective for tax years beginning on and after January 1, 2025.
According to our interpretation, the proposed legislation would decrease General Revenue Fund collections by up to $289 million in FY2026 and in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $29,150 in FY2026 and $11,000 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 |
0 |
29,150 |
11,000 |
| Personal Services |
0 |
11,000 |
11,000 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
1,650 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
-289,000,000 |
-289,000,000 |
Explanation of above estimates (including long-range effect):
Per our interpretation, the bill would repeal the current “Child and dependent care credit” under W. Va. Code §11-21-26 and create a child tax credit. The bill authorizes a refundable personal income tax credit for residents who are allowed a federal child tax credit for an eligible child on their federal return. The amount of the credit is $1,000 per eligible child. The federal credit allowed can be for either the Federal “Child and other Dependent tax credit” or “Additional child credit.”
The bill, if passed, would be effective for tax years beginning on and after January 1, 2025.
According to our interpretation, the proposed legislation would decrease General Revenue Fund collections by up to $289 million in FY2026 and in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $29,150 in FY2026 and $11,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to repeal the non-refundable child tax credit and create and authorize a refundable child tax credit.
This bill purports to provide a $1,000 refundable credit for those resident individuals “claiming” the federal child tax credit of section 24 of the internal revenue code. The use of “claims the credit” rather than “allowed [the credit]” is problematic. A taxpayer may claim a federal credit but not be entitled to it or they may “claim” the credit only to have it ultimately disallowed.
The bill title states that §61-8B-16 is repealed, whereas, the body of the bill indicates that §11-21-26 is “[Repealed.]” This is an apparent attempt to repeal the “child and dependent care credit” passed during the 2nd Special Session of 2024. However, §61-8B-16 is “Payment for costs of forensic medical examination.” This is a title defect and should be corrected. In addition, the title states, “refundable child or childcare tax credit.” However, the bill only attempts to create a “child tax credit.”
The language of the bill is vague as to whether it is creating a $1,000 “per eligible child” credit or a $1,000 “per taxpayer” credit. If the credit is to align with the federal child tax credit, the credit should be a credit for “each eligible child.”
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov