Date Requested: February 10, 2015
Time Requested: 01:03 PM
Agency: Tax Department, State
CBD Number: Version: Bill Number: Resolution Number:
2867 Introduced HB2687
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 make the personal exemptions of residents for purposes of West Virginia’s personal income tax the same as allowed for federal income tax purposes.
    
    According to our interpretation, for tax years beginning after December 31, 2014, the proposed bill would increase the amount of the personal exemption for Personal Income Tax purposes from $2,000 to the same amount allowed for federal income tax purposes. The federal exemption allowance is $4,000 per exemption for Tax Year 2015; this allowance is increased for most tax years. Based on the federal exemption allowance for Tax Year 2015, passage of this bill would reduce the General Revenue Fund by roughly $130 million in FY2016. The revenue loss would increase in subsequent fiscal years due to the annual increases in the federal exemption allowance.
    
    Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2016.
    



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 5,000 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 5,000 0
2. Estimated Total Revenues 0 -130,000,000 0


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


    According to our interpretation, for tax years beginning after December 31, 2014, the proposed bill would increase the amount of the personal exemption for Personal Income Tax purposes from $2,000 to the same amount allowed for federal income tax purposes. The federal exemption allowance is $3,950 per exemption for Tax Year 2015; this allowance is increased for most tax years. Based on the federal exemption allowance for Tax Year 2015, passage of this bill would reduce the General Revenue Fund by roughly $130 million in FY2016. The revenue loss would increase in subsequent fiscal years due to the annual increases in the federal exemption allowance.
    
    Additional administrative costs incurred by the State Tax Department would be $5,000 in FY2016.
    
    
    



Memorandum


    The stated purpose of this bill is to make the personal exemptions of residents for purposes of West Virginia’s personal income tax the same as allowed for federal income tax purposes.
    
    As written, the proposed change would also result in a phase-out of the personal exemption allowance for those with federal adjusted gross income over $305,050 (joint), $279,650 (head of household), $254,200 (single), and $152,525 (married filing separately). For some higher income taxpayers, the proposed change would increase State tax liability due to a 50% or greater phase-out of their personal exemption allowance.
    
    
    



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