FISCAL NOTE
FUND(S):
General Revenue Fund
Sources of Revenue:
General Fund
Legislation creates:
Neither Program nor Fund
Fiscal Note Summary
Effect this measure will have on costs and revenues of state government.
The stated purpose of this bill is to subtract social security benefits from federal adjusted gross income for purposes of personal income tax.
This bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning after December 31, 2009. According to our interpretation, passage of this bill would reduce General Revenue Fund collections by roughly $41.7 million per year due to the exclusion of taxable social security benefits from the State Personal Income Tax. Based upon anticipated estimated tax payment changes, collections would decrease by $10.4 million in Fiscal Year 2010 and by $41.7 million in Fiscal Year 2011. The value of this proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits.
There would be no additional costs to the State Tax Department.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2009
Increase/Decrease
(use"-") |
2010
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 |
-10,000,000 |
-10,000,000 |
Explanation of above estimates (including long-range effect):
This bill proposes a modification that would reduce federal adjusted gross income, for West Virginia Personal Income Tax purposes, by the amount of Social Security benefits paid to the extent that the benefits are included in federal adjusted gross income. The modification would be effective for taxable years beginning after December 31, 2009.
According to our interpretation, passage of this bill would reduce General Revenue Fund collections by at least $41.7 million per year due to the exclusion of taxable social security benefits from the State personal income tax. The proposed change takes effect for tax years beginning on or after January 1, 2010. Based upon anticipated estimated tax payment changes, collections would decrease by $10.4 million in Fiscal Year 2010 and by at least $41.7 million per year, thereafter.
According to IRS Statistics of Income Data for Tax Year 2006, 81,713 West Virginia residents included nearly $737 million of social security benefits in adjusted gross income. Taxable social security benefits are expected to rise to roughly $1,082 million by 2010.
There would be no additional costs to the State Tax Department.
Memorandum
Person submitting Fiscal Note: Mark Muchow
Email Address: kpetry@tax.state.wv.us