HB 2001 — Relating to exempting social security benefits from personal income tax

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NEWSAnd, RELEASESOn HELPFULpage LINKSfour, Committeesection Substitutetwelve, «lines Houseeighty-two Billthrough 2001eighty-seven, Historyby OTHERstriking VERSIONSout  — all Introducedof Versionsubdivision  | (8) Enrolledand Versioninserting -in Finallieu Versionthereof  | a  | new Emailsubdivision, Key:designated subdivision (8), to read as follows:

Green(8) =Decreasing existingmodification Code.for social security income.

Red(A) =For newtaxable codeyears beginning on and after January 1, 2020, 35 percent of the amount of social security benefits received pursuant to beTitle enacted42 WESTU.S.C., virginiaChapter legislature7, regularincluding, sessionbut Committeenot Substitutelimited forto, Housesocial Billsecurity 2001benefits Bypaid Harshbarger,by Martin,the P.,Social McGeehan,Security Atkinson,Administration Storch,as Pack,Old Rowan,Age, Hollen,Survivors Mandt,and Kelly,Disability J.Insurance Benefits as provided in §42 U.S.C.

and401 Sypoltet. [Originating in the Committee on Finance;

Januaryseq. 29, 2019.] A BILL to amend and reenact §11-21-12 of the Code of West Virginia, 1931, as amended, relating to exempting social security benefits from personal income tax;

clarifyingor thatas tierSupplemental oneSecurity railroadIncome retirementfor benefitsthe areAged, notBlind, subjectand toDisabled personalas incomeprovided tax;in §42 U.S.C.

specifying1381 anet. effective date;

andseq., removingincluded obsoletein language.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)(D) of this code.

Be(B) itFor enactedtaxable years beginning on or after January 1, 2021, 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 LegislatureSocial ofSecurity WestAdministration Virginia:as Old Age, Survivors and Disability Insurance Benefits as provided in §42 U.S.C.

ARTICLE401 21.et.

PERSONALseq. INCOME TAX.

§11-21-12.or as Supplemental Security Income for the Aged, Blind, and Disabled as provided in §42 U.S.C.

West1381 Virginiaet. adjusted gross income of resident individual.

(a)seq., General.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)(D) of this code.

--(C) TheFor Westtaxable Virginiayears adjustedbeginning grosson incomeor after January 1, 2022, 100 percent of athe residentsocial individualsecurity meansbenefits hisreceived orpursuant herto federalTitle adjusted42 grossU.S.C., incomeChapter as7, definedincluding, inbut thenot lawslimited ofto, thesocial Unitedsecurity Statesbenefits forpaid by the taxableSocial yearSecurity withAdministration theas modificationsOld specifiedAge, Survivors and Disability Insurance Benefits as provided in this§42 section.U.S.C.

(b)401 Modificationset. increasing federal adjusted gross income.

--seq. 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 ofas aSupplemental politicalSecurity subdivisionIncome offor anythe otherAged, stateBlind, unlessand createdDisabled byas compactprovided orin agreement§42 toU.S.C. which this state is a party;

(2)1381 Interestet. 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)seq., Anyincluded deductionin allowed when determining federal adjusted gross income for the taxable year shall be allowed as a decreasing modification from federal adjusted gross income taxwhen purposesdetermining forWest theVirginia taxable yearincome thatsubject isto notthe allowedtax asimposed aby deduction under this articlearticle, forsubject to the taxablelimitation year;in §11-21-12(c)(8)(D) of this code.

(4)(D) InterestThe ondeduction indebtednessallowed incurredby or§11-21-12(c)(8)(A), continued§11-21-12(c)(8)(B), toand purchase§11-21-12(c)(8)(C) orof carrythis obligationscode orare securitiesallowable only when the federal adjusted gross income fromof whicha ismarried exemptcouple fromfiling taxa underjoint thisreturn article,does tonot theexceed extent$100,000, deductibleor $50,000 in determiningthe federalcase adjustedof grossa income;single individual or a married individual filing a separate return.

(5)  Interest  on  aAdopted depositoryRejected 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;

(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.

(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.