FISCAL NOTE
Date Requested: January 22, 2024
Time Requested: 04:00 PM |
| Agency: |
Tax & Revenue Department, WV State |
|---|
| CBD Number: |
Version: |
Bill Number: |
Resolution Number: |
| 2937 |
Introduced |
HB4989 |
|
|---|
| CBD Subject: |
Taxation |
|---|
|
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Increases Revenue From Existing Sources
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to impose and additional 1.5% tax rate on nonresidents.
Based on our interpretation, the legislation would impose an additional 1.5 percent personal income tax on the West Virginia source income of nonresident individuals. The legislation would be effective beginning with Tax Year 2025.
Absent Constitutional concerns, the legislation, if passed, might result in an increase in General Revenue collection of up to $21.1 million in FY2025, $53.8 million in FY2026 and by increasing amounts in subsequent fiscal years.
There would be no additional administrative costs incurred by the State Tax Department.
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 |
0 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
0 |
0 |
| 2. Estimated Total Revenues |
0 |
21,100,000 |
53,800,000 |
Explanation of above estimates (including long-range effect):
Based on our interpretation, the legislation would impose an additional 1.5 percent personal income tax on the West Virginia source income of nonresident individuals. The legislation would be effective beginning with Tax Year 2025.
Absent Constitutional concerns, the legislation, if passed, might result in an increase in General Revenue collection of up to $21.1 million in FY2025, $53.8 million in FY2026 and by increasing amounts in subsequent fiscal years.
There would be no additional administrative costs incurred by the State Tax Department.
Memorandum
The stated purpose of this bill is to impose and additional 1.5% tax rate on nonresidents.
The bill amends W.Va. Code §11-21-32 by adding subsection (g), the entire text of which provides: “Effective as of tax year 2025, nonresidents of this state shall pay an additional 1.5% tax rate in addition to the taxes owed under this section.” This provision would violate the Privileges and Immunity Clause, the Equal Protection Clause, and the Commerce Clause of the U.S. Constitution, and the Equal and Uniform Protection Clause of the W.Va. Constitution. Furthermore, W.Va. Code §11-21-30 (Computation of tax on income of nonresidents and part-year residents) strongly implies that the same rate applies to West Virginia taxable income regardless of whether the taxpayer is a West Virginia resident or not.
Person submitting Fiscal Note: Mark Muchow
Email Address: kerri.r.petry@wv.gov