This bill amends various sections of the West Virginia Code to enhance the taxation framework for non-grantor trusts. A significant provision is the exemption of non-grantor trusts administered in West Virginia from personal income tax, effective for tax years beginning on or after January 1, 2027. The bill introduces new definitions for non-grantor trusts and clarifies that these trusts, when managed by licensed private trust companies or resident trustees, will not be subject to the personal income tax imposed under the relevant sections of the code. Additionally, the bill adjusts existing tax provisions, ensuring that non-grantor trusts are explicitly excluded from tax calculations, thereby creating a more favorable tax environment aimed at attracting trust administration to the state.

Moreover, the bill outlines the filing requirements for income tax returns by married couples, decedents, individuals under disability, estates, and trusts, specifying that married couples must file in accordance with their federal tax filing status. It also introduces a withholding tax on West Virginia source income for nonresident partners and beneficiaries of pass-through entities, establishing a four percent rate that increases to six and one-half percent for taxable years starting after January 1, 2008. The bill further clarifies the responsibilities of trustees regarding the administration of trusts, including the designation of a trust's principal place of administration and the notification process for beneficiaries regarding any proposed changes. Overall, these amendments aim to modernize trust laws and improve the regulatory environment for trust operations 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