FISCAL NOTE

Date Requested: January 25, 2024
Time Requested: 09:40 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1150 Amendment HB4731
CBD Subject: Military and Veterans; 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 purpose of this bill is to establish a $5,000 tax credit for all active-duty military personnel, including National Guard active-duty members and reserve members. This bill, as written, refers to the tax benefits as both an exemption and a credit. Since the bill is unclear as to whether the benefit is an exemption or a credit, we are unable to estimate the revenue loss from this proposal. Additional administrative costs would be $15,000 in FY2025 and $22,500 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 15,000 22,500
Personal Services 0 0 22,500
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 15,000 0
2. Estimated Total Revenues 0 0 0


Explanation of above estimates (including long-range effect):


This bill, as written, refers to the tax benefit as both an exemption and a credit. In section 11-21-12o(b), the bill refers to the modification as both a credit and an exemption. Since the bill is unclear as to whether the benefit is an exemption or a credit, we are unable to estimate the revenue loss from this proposal. Military pay of most full-time military personnel domiciled in West Virginia but stationed outside the State is already exempt from State taxation. In addition, military income received by members of the National Guard or Armed Forces Reserves called to active duty in support of the contingency operation as defined in Executive Order 13223 as part of Operation Noble Eagle, Operation Enduring Freedom, Operation Iraqi Freedom, Operation New Dawn, Operation Inherent Resolve, and any other current or future military operations deemed to be part of the Overseas Contingency Operation (OCO) is also already exempt. Additional administrative costs would be $15,000 in FY2025 and $22,500 in subsequent fiscal years.



Memorandum


The purpose of this bill is to establish a $5,000 tax credit for all active-duty military personnel, including National Guard active-duty members and reserve members. The bill creates a new section of the code entitled “Reduction of West Virginia personal income tax for military members.” The substance of the bill is in subsection (b), which provides: (b) Tax credit exemption. – There is hereby enacted a tax credit towards the West Virginia personal income tax in the amount of the first $5000 per year earned for those serving in all branches of the military, including active National Guard members and National Guard reserve members. This first $5,000 earned by such military personnel shall be exempt from the West Virginia personal income tax. The provision can be either an exemption or a credit, but it cannot be both. The amount of the exemption or credit is set at “the first $5,000,” but it is unclear whether that credit or exemption is limited to income earned as a member of the military or if it applies to all income earned by a member of the military. The bill does not address how the credit or exemption applies if two married individuals who are both members of the military file a joint return. “The military” and “military personnel” are not defined. The credit or exemption may be available for only one year as the bill’s language states that the “section shall become effective for the 2024 tax year.”



    Person submitting Fiscal Note: Mark Muchow
    Email Address: kerri.r.petry@wv.gov