This bill amends various sections of the West Virginia Code to provide significant tax exemptions for non-grantor trusts administered in the state. Effective for tax years beginning on or after January 1, 2026, non-grantor trusts will be exempt from personal income tax, provided they are managed by licensed private trust companies or West Virginia resident trustees. The bill also clarifies definitions related to non-grantor trusts and ensures that they are excluded from existing tax calculations applicable to individuals, estates, and trusts. Additionally, it modifies tax credit provisions for nonresidents and part-year residents to align with these new exemptions, aiming to create a more favorable tax environment for trust administration in West Virginia.

Moreover, the bill addresses the filing of income tax returns and withholding tax obligations for nonresident partners, shareholders, and beneficiaries of estates and trusts. It establishes separate filing requirements for spouses with differing residency statuses and outlines the responsibilities of fiduciaries in filing returns. The bill introduces new withholding tax regulations for nonresident entities based on their taxable income and specifies conditions under which withholding may not be necessary. It also mandates that pass-through entities file distributee agreements with the Tax Commissioner and clarifies definitions to align with federal tax standards. Overall, the bill seeks to enhance the attractiveness of West Virginia as a jurisdiction for trust administration by exempting non-grantor trusts from state personal income tax.

Statutes affected:
Introduced Version: 11-21-3, 11-21-4g, 11-21-18, 11-21-30, 11-21-40, 11-21-51, 11-21-71a, 44D-1-108