HB793 (2007) Detail

Establishing an exemption from the interest and dividends tax for individuals who are 62 years of age or older.


HB 793-FN-A – AS INTRODUCED

2007 SESSION

07-0969

09/01

HOUSE BILL 793-FN-A

AN ACT establishing an exemption from the interest and dividends tax for individuals who are 62 years of age or older.

SPONSORS: Rep. Renzullo, Hills 27; Rep. Bettencourt, Rock 4; Rep. L. Ober, Hills 27; Rep. Hopfgarten, Rock 5; Rep. Itse, Rock 9

COMMITTEE: Ways and Means

ANALYSIS

This bill establishes a $24,000 exemption from the interest and dividends tax for individuals who are 62 years of age or older.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

07-0969

09/01

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Seven

AN ACT establishing an exemption from the interest and dividends tax for individuals who are 62 years of age or older.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 Purpose. The general court finds that pensions are being supplanted by IRAs, 401Ks, and other individual retirement investments and thus the primary income source for many senior citizens is personal investments, which result in interest and dividends. The general court further finds that it is unfair that a state which advertises itself as having no income tax has, in fact, a tax on the primary source of income of many of our senior citizens. Therefore, this act increases the exemption under the interest and dividends tax to $24,000 for persons 62 years of age or older.

2 Interest and Dividends Tax; Exemption. Amend RSA 77:3, I to read as follows:

I. Taxable income is that income received from interest and dividends during the tax year prior to the assessment date by:

(a) Except as provided under subparagraph (b), individuals who are inhabitants or residents of this state for any part of the taxable year whose gross interest and dividend income from all sources, including income from a qualified investment company pursuant to RSA 77:4, V, exceeds $2,400 during that taxable period.

(b) Individuals who are 62 years of age or older and who are inhabitants or residents of this state for any part of the taxable year whose gross interest and dividend income from all sources, including income from a qualified investment company pursuant to RSA 77:4, V, exceeds $24,000 during that taxable period.

[(b)] (c) Partnerships, limited liability companies, associations, and trusts, the beneficial interest in which is not represented by transferable shares, whose gross interest and dividend income from all sources exceeds $2,400 during the taxable year, but not including a qualified investment company as defined in RSA 77-A:1, XXI, or a trust comprising a part of an employee benefit plan, as defined in the Employee Retirement Income Security Act of 1974, section 3.

[(c)] (d) Fiduciaries deriving their appointment from a court of this state whose gross interest and dividend income from all sources exceeds $2,400 during the taxable year.

3 Interest and Dividends Tax; Exemptions. Amend RSA 77:5, I to read as follows:

I. Income of $2,400 for taxpayers under 62 years of age.

I-a. Income of $24,000 if either or both taxpayers are 62 years of age or older on the last day of the tax year.

4 Effective Date. This act shall take effect July 1, 2007.

LBAO

07-0969

Revised 01/31/07

HB 793 FISCAL NOTE

AN ACT establishing an exemption from the interest and dividends tax for individuals who are 62 years of age or older.

FISCAL IMPACT:

      The Department of Revenue Administration has determined this bill may decrease general fund revenue by $15,443,000 in fiscal year 2008 and each year thereafter. There will be no fiscal impact on county and local revenues or state, county, and local expenditures.

METHODOLOGY:

    The Department states this bill establishes an additional exemption of $24,000 from the interest and dividends tax for filers age 62 and older. The Department assumes this law would take effect July 1, 2007 and the costs of administering it could be absorbed within the existing budget. The Department calculated the estimated loss in revenue for FY 2008 based on tax year 2005 returns. In that year there were 24,480 returns that would have been eligible to take this exemption. An additional exemption of $24,000 per filer results in a tax savings of $1,200 for a single tax return or $2,400 for a joint tax return at the 5% tax rate. The loss in revenue is the lesser of the taxes on the exemption amount or actual taxes paid. The loss in revenue based on 2005 tax year data would be $15,443,000. The Department assumes this amount for FY 2008 and each year thereafter.