Bill Summary – FastDemocracy

WEST VIRGINIA LEGISLATURE
REGULAR SESSION
                 ENROLLED
         Committee Substitute for House Bill 4880
      BY DELEGATES HANSHAW (MR. SPEAKER),
  HORNBUCKLE, FEHRENBACHER, HOLSTEIN, HOWELL,
   BURKHAMMER, HILLENBRAND, DEAN, AND NESTOR
          (BY REQUEST OF THE EXECUTIVE)
  [Passed March 9, 2024; in effect ninety days from passage.]
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  AN ACT to amend and reenact §11-21-12 of the Code of West Virginia, 1931, as amended,
           relating to personal income tax; providing for the gradual elimination of the limitations set
           forth in §11-21-12(c)(8) of the said Code relating to the decreasing modification for social
           security benefits received pursuant to specified provisions of Title 42 U.S.C., Chapter 7;
           making technical corrections to remove obsolete language; and specifying retrospective
           effect.
     Be it enacted by the Legislature of West Virginia:
     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;
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        (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 §33-15-20 or §33-16-15 of this code 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;
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         (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, 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.
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        (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. For taxable
 years beginning after December 31, 2018, retirement income from the uniformed services,
 including the Army, Navy, Marines, Air Force, Coast Guard, Public Health Service, National
 Oceanic Atmospheric Administration, reserves, and National Guard, paid by the United States or
 by this state after December 31, 2018, 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) Decreasing modification for social security income.
        (A) For taxable years beginning on or after January 1, 2022, 100 percent of the social
 security benefits received pursuant to Title 42 U.S.C., Chapter 7, including, but not limited to,
 social security benefits paid by the Social Security Administration as Old Age, Survivors and
 Disability Insurance Benefits as provided in §42 U.S.C. 401 et. seq. or as Supplemental Security
 Income for the Aged, Blind, and Disabled as provided in §42 U.S.C. 1381 et. seq., included in
 federal adjusted gross income for the taxable year shall be allowed as a decreasing modification
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  from federal adjusted gross income when determining West Virginia taxable income subject to
  the tax imposed by this article, subject to the limitation in §11-21-12(c)(8)(B) of this code.
         (B) The deduction allowed by §11-21-12(c)(8)(A) of this code are allowable only when the
  federal adjusted gross income of a married couple filing a joint return does not exceed $100,000,
  or $50,000 in the case of a single individual or a married individual filing a separate return.
         (C) For taxable years beginning on and after January 1, 2024, 35 percent of the amount
 of social security benefits received pursuant to Title 42 U.S.C., Chapter 7, including, but not limited
 to, social security benefits paid by the Social Security Administration as Old Age, Survivors and
 Disability Insurance Benefits as provided in §42 U.S.C. 401 et. seq. or as Supplemental Security
 Income for the Aged, Blind, and Disabled as provided in §42 U.S.C. 1381 et. seq., included in
 federal adjusted gross income for the taxable year shall be allowed as a decreasing modification
 from federal adjusted gross income when determining West Virginia taxable income subject to
 the tax imposed by this article, subject to the limitation in §11-21-12(c)(8)(F) of this code.
        (D) For taxable years beginning on or after January 1, 2025, 65 percent of the social
 security benefits received pursuant to Title 42 U.S.C., Chapter 7, including, but not limited to,
 social security benefits paid by the Social Security Administration as Old Age, Survivors and
 Disability Insurance Benefits as provided in §42 U.S.C. 401 et. seq. or as Supplemental Security
 Income for the Aged, Blind, and Disabled as provided in §42 U.S.C. 1381 et. seq., included in
 federal adjusted gross income for the taxable year shall be allowed as a decreasing modification
 from federal adjusted gross income when determining West Virginia taxable income subject to
 the tax imposed by this article, subject to the limitation in §11-21-12(c)(8)(F) of this code.
        (E) For taxable years beginning on or after January 1, 2026, 100 percent of the social
 security benefits received pursuant to Title 42 U.S.C., Chapter 7, including, but not limited to,
 social security benefits paid by the Social Security Administration as Old Age, Survivors and
 Disability Insurance Benefits as provided in §42 U.S.C. 401 et. seq. or as Supplemental Security
 Income for the Aged, Blind, and Disabled as provided in §42 U.S.C. 1381 et. seq., included in
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 federal adjusted gross income for the taxable year shall be allowed as a decreasing modification
 from federal adjusted gross income when determining West Virginia taxable income subject to
 the tax imposed by this article, subject to the limitation in §11-21-12(c)(8)(F) of this code.
        (F) The deduction allowed by §11-21-12(c)(8)(C), §11-21-12(c)(8)(D), and §11-21-
 12(c)(8)(E) of this code are allowable only when the federal adjusted gross income of a married
 couple filing a joint return exceeds $100,000, or $50,000 in the case of a single individual or a
 married individual filing a separate return.
        (9) 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 65 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), (7), and (8) 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), (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 modifications under subdivisions (1), (2), (5), (6), (7), and (8) of this subsection;
        (10) 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 65
 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:
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         (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;
         (11) Contributions from any source to a medical savings account established by or for the
 individual pursuant to §33-15-20 or §33-16-15 of this code, 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; and
         (12) Any other income which this state is prohibited from taxing under the laws of the
 United States including, but not limited to, tier I retirement benefits as defined in Section 86(d)(4)
 of the Internal Revenue Code.
         (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 §11-
 21-19 of this code.
         (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
 §11-21-17 of this code.
         (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
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 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.
        (3) Changes in the language of this section enacted in the year 2019 shall apply to taxable
 years beginning after December 31, 2018.
        (4)   Changes in the language of this section enacted in the year 2024 shall apply
 retroactively to taxable years beginning after December 31, 2023.
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          The Clerk of the House of Delegates and the Clerk of the Senate hereby certify that the foregoing bill is correctly enrolled.
      ...............................................................
           Clerk of the House of Delegates
                          ...............................................................
                                          Clerk of the Senate Originated in the House of Delegates.
      In effect ninety days from passage.
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