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 to determine West Virginia 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 on or after January 1, 2014.
According to our interpretation, passage of this bill would reduce General Revenue Fund collections by roughly $72.3 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 up to $18.1 million in Fiscal Year 2014 and by up to $72.3 million in Fiscal Year 2015. The value of this proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits.
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $10,000 in FY2015.
Fiscal Note Detail
| Effect of Proposal |
Fiscal Year |
2014
Increase/Decrease
(use"-") |
2015
Increase/Decrease
(use"-") |
Fiscal Year
(Upon Full
Implementation) |
| 1. Estmated Total Cost |
0 |
10,000 |
0 |
| Personal Services |
0 |
0 |
0 |
| Current Expenses |
0 |
0 |
0 |
| Repairs and Alterations |
0 |
0 |
0 |
| Assets |
0 |
0 |
0 |
| Other |
0 |
10,000 |
0 |
| 2. Estimated Total Revenues |
-18,100,000 |
-72,300,000 |
-72,300,000 |
Explanation of above estimates (including long-range effect):
Passage of this bill would create 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 on or after January 1, 2014.
According to our interpretation, passage of this bill would reduce General Revenue Fund collections by roughly $72.3 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 up to $18.1 million in Fiscal Year 2014 and by up to $72.3 million in Fiscal Year 2015. The value of this proposed tax exclusion will escalate over time as members of the baby-boom generation begin receiving Social Security benefits.
According to IRS Statistics of Income Data for Tax Year 2011, 106,014 West Virginia residents included more than $1,095 million of social security benefits in adjusted gross income. Taxable social security benefits are expected to rise to roughly $1,299 million by 2015.
Additional administrative costs to the State Tax Department associated with passage of this bill would be roughly $10,000 in FY2015. The additional costs would be for programming changes and testing of the programmatic changes.
Memorandum
Person submitting Fiscal Note: Mark B. Muchow
Email Address: Roger.D.Cox@wv.gov