Social Security tax bill now has phase-in provisions, income caps

CHARLESTON, W.Va. — The elimination of the state tax on Social Security benefits would be phased-in over a three-year period in bill previously passed by the House of Delegates but changed by the state Senate Finance Committee Monday.

Angela Vance

HB 2001, which passed the committee with little discussion, now calls for the tax to be eliminated by 35 percent in the first year, increasing to 65 percent in the second year and to the full 100 percent in the third year.

When the bill passed the House it contained provisions that would have eliminated the tax all at one time. The $50 million hit to the state’s general revenue fund gave some Senate leaders heartburn, West Virginia AARP Associate State Director Angela Vance told MetroNews.

“There are a lot of proposals this legislative session that have to do with the general revenue fund. There’s also a huge secondary road issue here that we are talking about,” Vance said.

The House passed the bill Feb. 1. Vance said her organization has been talking to Senate leaders for several days and agreed to the compromise.

“The bill passed the House pretty quickly and it’s been sitting over in the Senate for some time. So we’ve been working with Senate leadership to come to a compromise that we feel is fair to everybody,” Vance said.

Craig Blair

The $50 million cost has been reduced to $10 million, according to Senate Finance Committee Chairman Craig Blair.

The Senate Finance Committee’s changes include an income cap. Those who receive Social Security but have an federal adjusted gross income of $100,000 won’t be eligible for the state tax cut. The cap is set at $50,000 for single filers. Incomes below $21,000 already pay no tax on benefits in West Virginia.

“People who are over $100,000 adjusted gross income probably don’t need the relief as much as the middle income tax payer does,” Vance said.

For average Social Security benefit in West Virginia is $14,000 a year. Vance said reducing the tax by 35 percent would help fewer residents in the first year but more residents in year two when the reduction moves to 65 percent.

The bill will be on first reading in the Senate Tuesday. The bill passed the House 96-1 and delegates would have to agree to the changes the Senate made or the measure could be headed toward a conference committee in the final days of the session.

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