FISCAL NOTE
Date Requested: March 03, 2025
Time Requested: 03:45 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 3406 |
Introduced |
HB3077 |
|
|---|
| CBD Subject: |
Labor |
|---|
|
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 relates to the creation of the West Virginia Skilled and Ready to Work Internship and Apprenticeship Incentive Act.
According to our interpretation, passage of this bill would create a 50% wage tax credit up to $10,000 per qualified employee for employers who provide a qualified internship or apprenticeship training program. The “Qualified Internship or Apprenticeship means a structured, paid work-based learning experience that is registered with the West Virginia Department of Economic Development or the U.S. Department of Labor.” No employer may claim more than $150,000 in tax credits per year. Unused tax credits may be carried forward for up to two consecutive years. We are unable to fully quantify the cost of this bill partly because the proposed tax credits would not necessarily be limited to activity within West Virginia but only limited by state income taxes paid in West Virginia.
The following fiscal information assumes that the new tax credit would only apply to qualified apprenticeships and internships within the State of West Virginia. The State currently provides a separate Apprenticeship Training Tax Credit not to exceed up to 50% of actual wages paid or $2,000 at a cost of roughly $300,000 per year. If these employers can take full advantage of this new additional tax credit, the additional revenue loss associated with existing tax credit claiming apprenticeships could be as high as $1.5 million per year. There were 4,115 registered apprentices in West Virginia in FY2024. We would expect the more generous tax credit to attract more interest from such employers. We do not possess accurate details on the number of paid internships in the private sector within West Virginia that would qualify for additional tax credits. Given both known and unknown parameters, we would expect the total cost of this proposed tax credit to be likely more than $1.5 million per year.
The State of Missouri offers a similar tax credit of $1,500 per intern with a total cap of no more than $9,000 per employer and a statewide cap of no more than $1 million in total tax credits authorized in a single year.
Additional administrative costs incurred by the State Tax Department would be $42,900 in FY2026 and $24,750 per year in FY2027 and thereafter.
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 |
42,900 |
24,750 |
| Personal Services |
0 |
24,750 |
24,750 |
| Current Expenses |
0 |
1,650 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
16,500 |
0 |
| 2. Estimated Total Revenues |
0 |
0 |
0 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would create a 50% wage tax credit up to $10,000 per qualified employee for employers who provide a qualified internship or apprenticeship training program. The “Qualified Internship or Apprenticeship means a structured, paid work-based learning experience that is registered with the West Virginia Department of Economic Development or the U.S. Department of Labor.” No employer may claim more than $150,000 in tax credits per year. Unused tax credits may be carried forward for up to two consecutive years. We are unable to fully quantify the cost of this bill partly because the proposed tax credits would not necessarily be limited to activity within West Virginia but only limited by state income taxes paid in West Virginia.
The following fiscal information assumes that the new tax credit would only apply to qualified apprenticeships and internships within the State of West Virginia. The State currently provides a separate Apprenticeship Training Tax Credit not to exceed up to 50% of actual wages paid or $2,000 at a cost of roughly $300,000 per year. If these employers can take full advantage of this new additional tax credit, the additional revenue loss associated with existing tax credit claiming apprenticeships could be as high as $1.5 million per year. There were 4,115 registered apprentices in West Virginia in FY2024. We would expect the more generous tax credit to attract more interest from such employers. We do not possess accurate details on the number of paid internships in the private sector within West Virginia that would qualify for additional tax credits. Given both known and unknown parameters, we would expect the total cost of this proposed tax credit to be likely more than $1.5 million per year.
The State of Missouri offers a similar tax credit of $1,500 per intern with a total cap of no more than $9,000 per employer and a statewide cap of no more than $1 million in total tax credits authorized in a single year.
Additional administrative costs incurred by the State Tax Department would be $42,900 in FY2026 and $24,750 per year in FY2027 and thereafter.
Memorandum
The stated purpose of this bill relates to the creation of the West Virginia Skilled and Ready to Work Internship and Apprenticeship Incentive Act.
The last section of this bill sets forth a list of positions that do not qualify for this proposed tax credit, and each of these named positions lacks clarity and needs to be defined.
The proposed credit does not clearly require that the internship or apprenticeship must be in West Virginia. Simply being subject to the Personal Income Tax and Corporation Net Income Tax, does not mean that the employer is based in West Virginia.
This bill is also silent regarding whether any credit remains after the two-year carryforward period is forfeited. While this bill provides for annual reporting by the employer, it does not provide for any credit recapture if an internship or apprenticeship fails to meet all requirements after being certified. The bill provides rulemaking authority to the Department of Economic Development but not to the Tax Commissioner.
Person submitting Fiscal Note: Mark Muchow
Email Address: RADfiscal@wv.gov