Bill Text: WV SB2001 | 2017 | 2nd Special Session | Introduced
Bill Title: Exempting military retirement income from state income tax
Spectrum: Bipartisan Bill
Status: (Introduced - Dead) 2017-10-16 - To Finance [SB2001 Detail]
Download: West_Virginia-2017-SB2001-Introduced.html
WEST virginia Legislature
2017 second exTraordinary
session
FISCAL
NOTE
By
(
[Introduced October 16, 2017;
Referred to the Committee on Finance]
A
BILL to amend and reenact §11-21-12 of the Code of West Virginia, 1931, as
amended, relating to exempting military retirement income from personal income
tax after specified date.
Be it enacted by the Legislature of West Virginia:
That
§11-21-12 of the Code of West Virginia, 1931, as amended, be amended and reenacted
to read as follows:
ARTICLE 21. PERSONAL
INCOME TAX.
§11-21-12. West Virginia
adjusted gross income of resident individual.
(a) General. -- The West Virginia adjusted gross income of a resident
individual means his or her federal adjusted gross income as defined in the
laws of the United States for the taxable year with the modifications specified
in this section.
(b) Modifications increasing federal adjusted gross income. -- There
shall be added to federal adjusted gross income, unless already included
therein, the following items:
(1) Interest income on
obligations of any state other than this state or of a political subdivision of
any other state unless created by compact or agreement to which this state is a
party;
(2) Interest or dividend
income on obligations or securities of any authority, commission or
instrumentality of the United States, which the laws of the United States
exempt from federal income tax but not from state income taxes;
(3) Any deduction allowed
when determining federal adjusted gross income for federal income tax purposes
for the taxable year that is not allowed as a deduction under this article for
the taxable year;
(4) Interest on
indebtedness incurred or continued to purchase or carry obligations or
securities the income from which is exempt from tax under this article, to the
extent deductible in determining federal adjusted gross income;
(5) Interest on a
depository institution tax-exempt savings certificate which is allowed as an
exclusion from federal gross income under Section 128 of the Internal Revenue
Code, for the federal taxable year;
(6) The amount of a lump
sum distribution for which the taxpayer has elected under Section 402(e) of the
Internal Revenue Code of 1986, as amended, to be separately taxed for federal
income tax purposes; and
(7) Amounts withdrawn from
a medical savings account established by or for an individual under section
twenty, article fifteen, chapter thirty-three of this code or section fifteen,
article sixteen of said chapter that are used for a purpose other than payment
of medical expenses, as defined in those sections.
(c) Modifications reducing federal adjusted gross income. -- There
shall be subtracted from federal adjusted gross income to the extent included
therein:
(1) Interest income on
obligations of the United States and its possessions to the extent includable
in gross income for federal income tax purposes;
(2) Interest or dividend
income on obligations or securities of any authority, commission or instrumentality
of the United States or of the State of West Virginia to the extent includable
in gross income for federal income tax purposes but exempt from state income
taxes under the laws of the United States or of the State of West Virginia,
including federal interest or dividends paid to shareholders of a regulated
investment company, under Section 852 of the Internal Revenue Code for taxable
years ending after June 30, 1987;
(3) Any amount included in
federal adjusted gross income for federal income tax purposes for the taxable
year that is not included in federal adjusted gross income under this article
for the taxable year;
(4) The amount of any
refund or credit for overpayment of income taxes imposed by this state, or any
other taxing jurisdiction, to the extent properly included in gross income for
federal income tax purposes;
(5) Annuities, retirement
allowances, returns of contributions and any other benefit received under the
West Virginia Public Employees Retirement System, and the West Virginia
State Teachers Retirement System, and all forms of military retirement,
including regular Armed Forces, reserves and National Guard including any
survivorship annuities derived therefrom, to the extent includable in gross
income for federal income tax purposes: Provided,
That notwithstanding any provisions in this code to the contrary this
modification shall be limited to the first $2,000 of benefits received under
the West Virginia Public Employees Retirement System, the West Virginia State
Teachers Retirement System and, including any survivorship annuities derived
therefrom, to the extent includable in gross income for federal income tax
purposes for taxable years beginning after December 31, 1986; and the first $2,000 of benefits received under any federal
retirement system to which Title 4 U.S.C. §111 applies: Provided, however, That the total modification under this paragraph
shall not exceed $2,000 per person receiving retirement benefits and this
limitation shall apply to all returns or amended returns filed after December
31, 1988;
(6) Retirement income
received in the form of pensions and annuities after December 31, 1979, under
any West Virginia police, West Virginia Firemen's Retirement System or the West
Virginia State Police Death, Disability and Retirement Fund, the West Virginia
State Police Retirement System or the West Virginia Deputy Sheriff Retirement
System, including any survivorship annuities derived from any of these
programs, to the extent includable in gross income for federal income tax
purposes;
(7) (A) For taxable years
beginning after December 31, 2000, and ending prior
to January 1, 2003, an amount equal to two percent multiplied by the number of
years of active duty in the Armed Forces of the United States of America with
the product thereof multiplied by the first $30,000 of military
retirement income, including retirement income from the regular Armed Forces,
reserves and National Guard paid by the United States or by this state after December 31, 2000, including any survivorship annuities,
to the extent included in gross income for federal income tax purposes for the
taxable year.
(B) For taxable years
beginning after December 31, 2000, the first $20,000 of military retirement
income, including retirement income from the regular Armed Forces, Reserves and
National Guard paid by the United States or by this state after December 31,
2002, including any survivorship annuities, to the extent included in gross
income for federal income tax purposes for the taxable year.
(C) For taxable years
beginning after December 31, 2017, military retirement income, including
retirement income from the regular Armed Forces, Reserves and National Guard
paid by the United States or by this state after December 31, 2017, including
any survivorship annuities, to the extent included in federal adjusted gross
income for the taxable year.
(D) In the event that any of the provisions of this
subdivision are found by a court of competent jurisdiction to violate either
the Constitution of this state or of the United States, or is held to be
extended to persons other than specified in this subdivision, this subdivision
shall become null and void by operation of law.
(8) Federal adjusted gross
income in the amount of $8,000 received from any
source after December 31, 1986, by any person who has attained the age of
sixty-five on or before the last day of the taxable year, or by any person
certified by proper authority as permanently and totally disabled, regardless
of age, on or before the last day of the taxable year, to the extent includable
in federal adjusted gross income for federal tax purposes: Provided, That if a person has a medical certification from a prior
year and he or she is still permanently and totally disabled, a copy of the
original certificate is acceptable as proof of disability. A copy of the form
filed for the federal disability income tax exclusion is acceptable: Provided, however, That:
(i) Where the total
modification under subdivisions (1), (2), (5), (6) and (7) of this subsection
is $8,000 per person or more, no deduction shall be allowed under this
subdivision; and
(ii) Where the total
modification under subdivisions (1), (2), (5), (6) and (7) of this subsection
is less than $8,000 per person, the total modification allowed under this
subdivision for all gross income received by that person shall be limited to
the difference between $8,000 and the sum of
modifications under subdivisions (1), (2), (5), (6) and (7) of this subsection;
(9) Federal adjusted gross
income in the amount of $8,000 received from any source after December 31, 1986,
by the surviving spouse of any person who had attained the age of sixty-five or
who had been certified as permanently and totally disabled, to the extent
includable in federal adjusted gross income for federal tax purposes: Provided, That:
(i) Where the total
modification under subdivisions (1), (2), (5), (6), (7) and (8) of this
subsection is $8,000 or more, no deduction shall be allowed under this
subdivision; and
(ii) Where the total
modification under subdivisions (1), (2), (5), (6), (7) and (8) of this
subsection is less than $8,000 per person, the total modification allowed under
this subdivision for all gross income received by that person shall be limited
to the difference between $8,000 and the sum of subdivisions (1), (2), (5),
(6), (7) and (8) of this subsection;
(10) Contributions from any
source to a medical savings account established by or for the individual
pursuant to section twenty, article fifteen, chapter thirty-three of this code
or section fifteen, article sixteen of said chapter, plus interest earned on
the account, to the extent includable in federal adjusted gross income for
federal tax purposes: Provided, That
the amount subtracted pursuant to this subdivision for any one taxable year may
not exceed $2,000 plus interest earned on the account. For married individuals
filing a joint return, the maximum deduction is computed separately for each
individual;
(11) For the 2006 taxable
year only, severance wages received by a taxpayer from an employer as the
result of the taxpayer's permanent termination from employment through a
reduction in force and through no fault of the employee, not to exceed $30,000.
For purposes of this subdivision:
(i) The term
"severance wages" means any monetary compensation paid by the
employer in the taxable year as a result
of permanent termination from employment in excess of regular annual wages
or regular annual salary;
(ii) The term
"reduction in force" means a net reduction in the number of employees
employed by the employer in West Virginia, determined based on total West
Virginia employment of the employer's controlled group;
(iii) The term
"controlled group" means one or more chains of corporations connected
through stock ownership with a common parent corporation if stock possessing at
least fifty percent of the voting power of all classes of stock of each of the
corporations is owned directly or indirectly by one or more of the corporations
and the common parent owns directly stock possessing at least fifty percent of
the voting power of all classes of stock of at least one of the other
corporations;
(iv) The term
"corporation" means any corporation, joint-stock company or
association and any business conducted by a trustee or trustees wherein
interest or ownership is evidenced by a certificate of interest or ownership or
similar written instrument; and
(12) Any other income which
this state is prohibited from taxing under the laws of the United States.
(d) Modification for West Virginia fiduciary adjustment. -- There shall
be added to or subtracted from federal adjusted gross income, as the case may
be, the taxpayer's share, as beneficiary of an estate or trust, of the West
Virginia fiduciary adjustment determined under section nineteen of this
article.
(e) Partners and S corporation shareholders. -- The amounts of
modifications required to be made under this section by a partner or an S
corporation shareholder, which relate to items of income, gain, loss or
deduction of a partnership or an S corporation, shall be determined under
section seventeen of this article.
(f) Husband and wife. -- If husband and wife determine their federal
income tax on a joint return but determine their West Virginia income taxes
separately, they shall determine their West Virginia adjusted gross incomes
separately as if their federal adjusted gross incomes had been determined separately.
(g) Effective date. –
(1) Changes in the language
of this section enacted in the year 2000 shall apply to taxable years beginning
after December 31, 2000.
(2) Changes in the language
of this section enacted in the year 2002 shall apply to taxable years beginning
after December 31, 2002.
NOTE: The purpose of this bill is
the exempt from personal income tax military retirement income, including
retirement income from the regular Armed Forces, Reserves and National Guard
paid by the United States or by this state after December 31, 2017, including
any survivorship annuities, to the extent included in gross income for federal
income tax purposes for the taxable year.
Strike-throughs indicate language
that would be stricken from the present law and underscoring indicates new
language that would be added.