HB 679-FN-A – AS INTRODUCED

2009 SESSION

09-0476

09/04

HOUSE BILL 679-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

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Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

09-0476

09/04

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Nine

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 Returns and Declarations. Amend RSA 77:18, IV to read as follows:

IV. Notwithstanding the provisions of paragraphs I-III, the following individuals shall not be required to file a return and shall not be considered to have gross or net taxable income for the purposes of this chapter:

(a) Every individual under 62 years of age whose total interest and dividend income is less than $2,400 for a taxable period and every individual 62 years of age or older whose total interest and dividend income is less than $24,000 for a taxable period.

(b) [For] Joint filers, both of whom are under 62 years of age, whose total interest and dividend income is less than $4,800 for a taxable period and joint filers, either or both of whom are 62 years of age or older, whose interest and dividend income is less than $24,000 for a taxable period.

5 Applicability. This act shall apply to taxable periods beginning on or after July 1, 2009.

6 Effective Date. This act shall take effect July 1, 2009.

LBAO

09-0476

01/23/09

HB 679-FN-A - 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 states this bill will decrease state revenues $13,264,753 in FY 2011 and by an indeterminable amount in each year thereafter. There will be no fiscal impact on county and local revenues or state, county and local expenditures.

METHODOLOGY:

The Department of Revenue Administration states this bill establishes an exemption from interest and dividends tax for individuals 62 years of age or older. The Department states this law would take effect July 1, 2009 and will apply to taxable periods beginning after July 1, 2009. As calendar year 2010 will be the first taxable period, the Department expects this bill will affect returns filed in FY 2011. Using data from tax year 2005, the Department estimates 24,480 filers with taxable interest and dividends income would be affected. If the primary filer or spouse is 62 years of age or over, and income over $24,000 is exempted per couple, state revenue will decrease by $13,264,753 in FY 2011. The Department states if some entities file an extension, the decrease in revenue may take place in FY 2012. Conversely, to the extent filers make estimate payments, the decrease in revenue may take place in FY 2010. Because the Department used data from tax year 2005, the potential reduction in state revenues for FY 2012 and FY 2013 was not calculated. The Department assumes it will be able to administer this bill at no additional cost.