H. B. 2268
(By Delegates Moye, Perry, Williams and Hamilton)
[Introduced February 13, 2013; referred to the
Committee on Finance.]
A BILL to amend and reenact §11-21-12 of the Code of West Virginia,
1931, as amended, relating to increasing the maximum personal
income tax exemption for persons over the age of sixty-five
and for persons who are totally disabled.
Be it enacted by the Legislature of West Virginia:
That §11-21-12 of the Code of West Virginia, 1931, as amended,
be amended and reenacted to read as follows:
ARTICLE 21. PERSONAL INCOME TAX.
PART I. GENERAL.
§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;
(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(7) Amounts withdrawn from a medical savings account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 section twenty, article
fifteen, chapter thirty-three of this code or section fifteen,
article sixteen of said chapter 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, the West Virginia State Teachers
Retirement System and all forms of military retirement, including
regular Armed Forces, Reserves and National Guard, 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 is 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 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 may 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, 2002, 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) 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) Federal adjusted gross income in the amount of eight
thousand dollars $16,000 received from any source after the
thirty-first day of December, one thousand nine hundred eighty-six
December 31, 2012, by any person who has attained the age of
sixty-five 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) and (7) of this subsection is eight thousand dollars $16,000 per person or more, no deduction shall be is allowed under
this subdivision; and
(ii) Where the total modification under subdivisions (1), (2),
(5), (6) and (7) of this subsection is less than eight thousand
dollars $16,000 per person, the total modification allowed under
this subdivision for all gross income received by that person shall
be is limited to the difference between eight thousand dollars
$16,000 and the sum of modifications under subdivisions (1), (2),
(5), (6) and (7) of this subsection;
(9) Federal adjusted gross income in the amount of eight
thousand dollars $16,000 received from any source after the
thirty-first day of December, one thousand nine hundred eighty-six
December 31, 2012 by the surviving spouse of any person who had
attained the age of sixty-five 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:
(i) Where the total modification under subdivisions (1), (2),
(5), (6), (7) and (8) of this subsection is eight thousand dollars
$16,000 or more, no deduction shall be is 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 eight
thousand dollars $16,000 per person, the total modification allowed under this subdivision for all gross income received by that person
shall be is limited to the difference between eight thousand
dollars $16,000 and the sum of subdivisions (1), (2), (5), (6), (7)
and (8) of this subsection;
(10) Contributions from any source to a medical savings
account established by or for the individual pursuant to section
twenty, article fifteen, chapter thirty-three of this code or
section fifteen, article sixteen of said chapter, 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;
(11) For the 2006 taxable year only, severance wages received
by a taxpayer from an employer as the result of the taxpayer's
permanent termination from employment through a reduction in force
and through no fault of the employee, not to exceed $30,000. For
purposes of this subdivision:
(i) The term "severance wages" means any monetary compensation
paid by the employer in the taxable year as a result of permanent
termination from employment in excess of regular annual wages or
regular annual salary;
(ii) The term "reduction in force" means a net reduction in the number of employees employed by the employer in West Virginia,
determined based on total West Virginia employment of the
employer's controlled group;
(iii) The term "controlled group" means one or more chains of
corporations connected through stock ownership with a common parent
corporation if stock possessing at least fifty percent of the
voting power of all classes of stock of each of the corporations is
owned directly or indirectly by one or more of the corporations and
the common parent owns directly stock possessing at least fifty
percent of the voting power of all classes of stock of at least one
of the other corporations;
(iv) The term "corporation" means any corporation, joint-stock
company or association and any business conducted by a trustee or
trustees wherein interest or ownership is evidenced by a
certificate of interest or ownership or similar written instrument;
and
(12) Any other income which this state is prohibited from
taxing under the laws of the United States.
(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 section nineteen of this article.
(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 is determined under section seventeen of this article.
(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
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 2013, shall apply to taxable years beginning after December
31, 2012.
NOTE: The purpose of this bill is to raise the maximum
personal income tax exemption for persons over the age of
sixty-five and for persons who are totally disabled from $8,000 to
$16,000.
Strike-throughs indicate language that would be stricken from
the present law, and underscoring indicates new language that would
be added.