This bill amends the West Virginia Code to provide favorable tax treatment for non-grantor trusts administered in the state. It exempts these trusts from personal income tax for tax years beginning on or after January 1, 2026, and introduces new legal definitions for non-grantor trusts, specifying that they will not be subject to the tax if administered by licensed private trust companies or West Virginia resident trustees. The bill also adjusts existing tax provisions, including tax rates for individuals, estates, and trusts, ensuring that the new rates do not apply to non-grantor trusts as defined in the bill.

Additionally, the bill outlines the responsibilities of various parties in the tax process, including executors and fiduciaries, and introduces provisions for withholding tax applicable to nonresident partners, shareholders, and beneficiaries of estates and trusts. It establishes a four percent withholding tax rate for certain taxable years, increasing to six and one-half percent for taxable years beginning on or after January 1, 2008. The bill also mandates that pass-through entities file annual copies of distributee agreements with the Tax Commissioner and clarifies the principal place of administration for trusts, allowing for transfers to other jurisdictions with proper notification to beneficiaries. Overall, the legislation aims to streamline tax compliance and encourage the establishment of non-grantor trusts in West Virginia.

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