FISCAL NOTE

Date Requested: January 14, 2019
Time Requested: 11:37 AM
Agency: Tax & Revenue Department, WV State
CBD Number: Version: Bill Number: Resolution Number:
1725 Introduced HB2201
CBD Subject: Taxation


FUND(S):

General Revenue Fund

Sources of Revenue:

General Fund

Legislation creates:

Increases Revenue From Existing Sources



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, 2018, the proposed bill would decrease the amount of the personal exemption for Personal Income Tax purposes from $2,000 to $0 allowed for federal income tax purposes. The elimination of the federal personal exemption for Tax Year 2018 was a provision in the Tax Cuts and Jobs Act. Based on the federal exemption allowance for Tax Year 2018, passage of this bill would increase the General Revenue Fund by roughly $134.0 million in FY2020 and thereafter.
    
    Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2020.
    
    



Fiscal Note Detail


Effect of Proposal Fiscal Year
2019
Increase/Decrease
(use"-")
2020
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 0 134,000,000 134,000,000


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


    According to our interpretation, for tax years beginning after December 31, 2018, the proposed bill would decrease the amount of the personal exemption for Personal Income Tax purposes from $2,000 to $0 allowed for federal income tax purposes. The elimination of the federal personal exemption for Tax Year 2018 was a provision in the Tax Cuts and Jobs Act. Based on the federal exemption allowance for Tax Year 2018, passage of this bill would increase the General Revenue Fund by roughly $134.0 million in FY2020 and thereafter.
    
    Additional administrative costs incurred by the State Tax Department would be $10,000 in FY2020.
    



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.
    
    This bill completely re-writes W.Va. Code §11-21-16, which sets forth West Virginia Personal Income Tax exemptions and would replace the State exemptions with the federal exemptions. The federal personal exemptions have been suspended by the Tax Cuts and Jobs Act of 2017 from 2018 until 2025. The IRC is not cited, making this bill difficult to administer.
    
    



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