Date Requested: February 24, 2015
Time Requested: 01:41 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
3122 Introduced HB2894
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 tax breaks for employers assisting employees paying student loans. It provides tax credits from personal and corporate income taxes and provides a modification reducing federal adjusted gross income for certain student loan payments.
    
    This bill would allow an employer a tax credit against their Personal Income Tax liability and Corporation Net Income Tax liability in the amount of 25 percent of a student loan repayment of principal and interest made by the employer directly to the relevant lender(s) on behalf of each qualified employee for tax years beginning after December 31, 2014.
    
    In addition, the bill allows a decreasing modification of up to $5,000 for Personal Income Tax purposes for student loan payments paid by a health care professional in a federally designated health care professional shortage area, a medically underserved area or a federal nursing shortage county as determined by the Secretary of the Department of Health and Human Resources or the Governor.
    
    The State Tax Department does not have sufficient information to accurately estimate the amount of credits or decreasing modifications that would be taken for student loan payments. We are unable to accurately estimate the revenue loss attributable to passage of this bill, but the loss could be substantial.
    
    Additional administrative costs incurred by the State Tax Department would be $91,000 in FY 2016 and $60,000 thereafter.
    



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 91,000 0
Personal Services 0 60,000 60,000
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 21,000 0
Other 0 10,000 0
2. Estimated Total Revenues 0 0 0


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


    This bill would allow an employer a tax credit against their Personal Income Tax liability and Corporation Net Income Tax liability in the amount of 25 percent of a student loan repayment of principal and interest made by the employer directly to the relevant lender(s) on behalf of each qualified employee for tax years beginning after December 31, 2014. Passage of this bill would provide an employer a tax credit of up to $450 for each qualified employee for whom the employer makes student loan repayments in the tax year. In order for a qualified employee to qualify for this tax credit, their student loan repayment must be at least $800 in the tax year.
    
    In addition, the bill allows a decreasing modification of up to $5,000 for Personal Income Tax purposes for student loan payments paid by a health care professional in a federally designated health care professional shortage area, a medically underserved area or a federal nursing shortage county as determined by the Secretary of the Department of Health and Human Resources or the Governor.
    
    The State Tax Department does not have sufficient information to accurately estimate the amount of credits or decreasing modifications that would be taken for student loan payments. We are unable to accurately estimate the revenue loss attributable to passage of this bill, but the loss could be substantial.
    
    Additional administrative costs incurred by the State Tax Department would be $91,000 in FY 2016 and $60,000 thereafter.



Memorandum


    The stated purpose of this bill is to provide tax breaks for employers assisting employees paying student loans. It provides tax credits from personal and corporate income taxes and provides a modification reducing federal adjusted gross income for certain student loan payments.
    
    The title of the bill refers to “tax breaks,” “tax credits” and “modification”. The term “tax breaks” does not exist in the West Virginia Code so the use of the term in the title may constitute a title defect.
    



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