FISCAL NOTE
Date Requested: January 11, 2024
Time Requested: 08:46 PM |
| Agency: |
Tax & Revenue Department, WV State |
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| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 1500 |
Introduced |
HB4323 |
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| CBD Subject: |
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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 remove limitations on certain deductions for modification of social security income in adjusted gross income.
According to our interpretation, passage of this bill would exempt all federally taxable Social Security benefits from personal income tax by removing income limitation language present in current law. Under current law, a decreasing modification for Social Security benefits is allowed when the federal adjusted gross income of a married couple filing a joint return does not exceed $100,000, or $50,000 in the case of a single individual or a married individual filing a single return. The language of the bill indicates that the changes apply to taxable years beginning after December 31, 2023.
Per our interpretation, based on updated statistical data and Personal Income Tax rates currently in effect, passage of this bill would reduce General Revenue Fund collections by a minimal amount in FY2024, by $37.0 million in FY2025, and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $61,500 in FY2025 and $45,000 in subsequent fiscal years.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2024
Increase/Decrease
(use"-") |
2025
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
61,500 |
45,000 |
| Personal Services |
0 |
45,000 |
45,000 |
| Current Expenses |
0 |
1,500 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
15,000 |
0 |
| 2. Estimated Total Revenues |
0 |
-37,000,000 |
-37,700,000 |
Explanation of above estimates (including long-range effect):
According to our interpretation, passage of this bill would exempt all federally taxable Social Security benefits from personal income tax by removing income limitation language present in current law. Under current law, a decreasing modification for Social Security benefits is allowed when the federal adjusted gross income of a married couple filing a joint return does not exceed $100,000, or $50,000 in the case of a single individual or a married individual filing a single return. The language of the bill indicates that the changes apply to taxable years beginning after December 31, 2023.
Per our interpretation, based on updated statistical data and Personal Income Tax rates currently in effect, passage of this bill would reduce General Revenue Fund collections by a minimal amount in FY2024, by $37.0 million in FY2025, and by increasing amounts in subsequent fiscal years.
Additional administrative costs incurred by the State Tax Department would be $61,500 in FY2025 and $45,000 in subsequent fiscal years.
Memorandum
The stated purpose of this bill is to remove limitations on certain deductions for modification of social security income in adjusted gross income.
Current W. Va. Code ยง11-21-12(c)(8) sets forth a decreasing modification for social security benefits that is phased in over a three-year period, from 35% for taxable years beginning on or after 2020, to 65% for taxable years beginning on or after 2021, to 100% for taxable years beginning on or after 2022. This bill removes the language set forth in paragraph (D) that excludes taxpayers from taking the social security decreasing modification when the federal AGI of a married couple filing a joint return is over $100,000 or $50,000 for an individual filing a separate return. The bill deletes paragraph (D) without also deleting references to paragraph (D) in paragraphs (A), (B), and (C), which may cause some confusion.
The bill includes an internal effective date in subdivision (g)(4), which makes the 2024 changes effective for taxable years beginning after December 31, 2023. This could cause confusion if other bills affecting this section are passed this year.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov