Date Requested: February 12, 2015
Time Requested: 12:39 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2586 Introduced HB2713
CBD Subject: Tax


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 provide taxpayers repaying their own student loans a modification reducing federal adjusted gross income in the amount of the interest paid, for personal income tax purposes.
    
    The proposed decreasing modification is only allowed for student loan interest not taken as a modification to income on the federal return for taxable years beginning after December 31, 2014. Currently, student loan interest up to $2,500 per taxpayer can be taken as both a federal deduction and above the line State deduction by taxpayers whose income is less than $80,000 ($160,000 for joint taxpayers). The provisions of this bill would expand the State deduction for those with interest cost in excess of $2,500 and for those with incomes in excess of the current ceilings set for this deduction. The annual cost of the current State student interest deduction is roughly $2.6 million. We are unable to accurately determine the additional revenue loss from this proposal.
    
    Additional administrative costs would be $25,000 in FY2016 and $10,000 in subsequent fiscal years.
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2015
Increase/Decrease
(use"-")
2016
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost 0 25,000 10,000
Personal Services 0 10,000 10,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 10,000 0
Other 0 5,000 0
2. Estimated Total Revenues 0 0 0


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


    The proposed decreasing modification is only allowed for student loan interest not taken as a modification to income on the federal return for taxable years beginning after December 31, 2014. We are unable to determine the revenue loss from this proposal.
    
    Currently, student loan interest up to $2,500 per taxpayer can be taken as a federal deduction by taxpayers whose income is less than $80,000 ($160,000 for joint taxpayers). The federal student loan interest deduction is incorporated in the determination of federal adjusted gross income, the starting point for West Virginia income taxes. Therefore, West Virginia also recognizes this deduction for State income tax purposes. According to IRS Statistics of Income, in tax year 2012, there were 52,160 West Virginia taxpayers who took a student loan deduction. The total amount deducted by all West Virginia taxpayers was $49.8 million. The cost of the existing State tax deduction is roughly $2.6 million per year.
    
    Additional administrative costs would be $25,000 in FY2016 and $10,000 in subsequent fiscal years.
    



Memorandum


    



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