H 4959 Session 112 (1997-1998)
H 4959 General Bill, By Chellis, Knotts and W. McLeod
Similar(S 890, S 892)
A BILL TO AMEND SECTION 12-6-1140, AS AMENDED, AND SECTION 12-6-1170, CODE OF
LAWS OF SOUTH CAROLINA, 1976, RELATING TO THE RETIREMENT INCOME DEDUCTION
ELECTION AND THE TAXABLE INCOME EXCLUSION ALLOWED PERSONS SIXTY-FIVE YEARS OF
AGE OR OLDER FOR PURPOSES OF THE STATE INDIVIDUAL INCOME TAX, SO AS TO
ELIMINATE THE ELECTION AND ALLOW AN ANNUAL DEDUCTION OF UP TO THREE THOUSAND
DOLLARS OF RETIREMENT INCOME AND UP TO TEN THOUSAND DOLLARS BEGINNING IN THE
TAXABLE YEAR THE TAXPAYER ATTAINS AGE SIXTY-FIVE, AND TO ALLOW AN ANNUAL
DEDUCTION OF ELEVEN THOUSAND FIVE HUNDRED DOLLARS OF SOUTH CAROLINA TAXABLE
INCOME BEGINNING IN THE TAXABLE YEAR THE TAXPAYER ATTAINS THE AGE OF
SIXTY-FIVE YEARS REDUCED BY THE RETIREMENT INCOME DEDUCTION, TO PROVIDE FOR
CLAIMING THIS DEDUCTION ON JOINT RETURNS, AND TO DELETE PROVISIONS RELATING TO
THE POSTPONEMENT OF THE MAXIMUM DEDUCTION UNDER THE PRIOR LAW.
04/02/98 House Introduced and read first time HJ-35
04/02/98 House Referred to Committee on Ways and Means HJ-36
04/23/98 House Committee report: Favorable Ways and Means HJ-45
04/28/98 House Member(s) added as co-sponsor(s): Rep(s) Knotts HJ-21
04/29/98 House Member(s) added as co-sponsor(s): Rep(s) McLeod HJ-13
04/29/98 House Debate adjourned until Thursday, April 30, 1998 HJ-25
04/29/98 House Reconsidered HJ-44
04/29/98 House Read second time HJ-44
04/30/98 House Read third time and sent to Senate HJ-9
05/05/98 Senate Introduced and read first time SJ-11
05/05/98 Senate Referred to Committee on Finance SJ-11
Indicates Matter Stricken
Indicates New Matter
COMMITTEE REPORT
April 23, 1998
H. 4959
Introduced by Rep. Chellis
S. Printed 4/23/98--H.
Read the first time April 2, 1998.
THE COMMITTEE ON WAYS AND MEANS
To whom was referred a Bill (H. 4959), to amend Section
12-6-1140, as amended, and Section 12-6-1170, Code of Laws of
South Carolina, 1976, relating to the retirement income deduction
election, etc., respectfully
REPORT:
That they have duly and carefully considered the same, and
recommend that the same do pass:
HENRY E. BROWN, JR., for Committee.
STATEMENT OF ESTIMATED FISCAL
IMPACT
This bill would reduce general fund individual income tax revenue
by an estimated $2.1 million in FY1998-99.
This bill allows individuals who are under age sixty-five a $3,000
deduction from retirement income and a $10,000 retirement income
deduction when they become sixty-five. Currently, a taxpayer must
elect an annual $3,000 retirement income deduction or defer any
deduction until age sixty-five when a $10,000 annual deduction is
allowed. When Section 12-6-1140 was amended by Act 155, Part II,
Section 2A in 1997, it permitted those taxpayers over sixty-five years
of age to take an $11,500 deduction from all taxable income reduced
by the $3,000 or $10,000 deduction the taxpayer is eligible to deduct
for that taxable year. The BEA, therefore, does not expect any
revenue impact for those individuals over sixty-five years of age that
previously elected to take the $3,000 deduction and are now eligible
to take a $10,000 deduction, because current law allows an $11,500
retirement deduction from all income for all individuals over age
sixty-five. This bill will allow taxpayers under age sixty-five with
retirement income who irrevocably elected to defer taking a
retirement income deduction until age sixty-five to take a $3,000
deduction beginning in 1998. The Department of Revenue estimates
that 10,000 individuals would now take the $3,000 retirement
election before reaching sixty-five years of age, and this would
reduce individual income tax collections by an estimated $2.1 million
in FY1998-99.
Approved By:
William C. Gillespie
Board of Economic Advisors
A BILL
TO AMEND SECTION 12-6-1140, AS AMENDED, AND
SECTION 12-6-1170, CODE OF LAWS OF SOUTH CAROLINA,
1976, RELATING TO THE RETIREMENT INCOME
DEDUCTION ELECTION AND THE TAXABLE INCOME
EXCLUSION ALLOWED PERSONS SIXTY-FIVE YEARS OF
AGE OR OLDER FOR PURPOSES OF THE STATE INDIVIDUAL
INCOME TAX, SO AS TO ELIMINATE THE ELECTION AND
ALLOW AN ANNUAL DEDUCTION OF UP TO THREE
THOUSAND DOLLARS OF RETIREMENT INCOME AND UP
TO TEN THOUSAND DOLLARS BEGINNING IN THE
TAXABLE YEAR THE TAXPAYER ATTAINS AGE
SIXTY-FIVE, AND TO ALLOW AN ANNUAL DEDUCTION OF
ELEVEN THOUSAND FIVE HUNDRED DOLLARS OF SOUTH
CAROLINA TAXABLE INCOME BEGINNING IN THE
TAXABLE YEAR THE TAXPAYER ATTAINS THE AGE OF
SIXTY-FIVE YEARS REDUCED BY THE RETIREMENT
INCOME DEDUCTION, TO PROVIDE FOR CLAIMING THIS
DEDUCTION ON JOINT RETURNS, AND TO DELETE
PROVISIONS RELATING TO THE POSTPONEMENT OF THE
MAXIMUM DEDUCTION UNDER THE PRIOR LAW.
SECTION 1. (A) Section 12-6-1140(3) of the 1976 Code, as
added by Act 76 of 1995, is amended to read:
"(3) a deduction for retirement income as provided
in Section 12-6-1170;"
(B) Section 12-6-1140 of the 1976 Code, as last amended by
Section 2, Part II of Act 155 of 1997, is further amended by deleting
item (9) which reads:
"(9) South Carolina taxable income received by a resident
individual taxpayer who before or during the applicable taxable year
has attained the age of sixty-five. If a married taxpayer eligible for
this deduction files a joint federal income tax return with a spouse
who is not eligible for this deduction, then their joint income must be
allocated between them on a pro-rata basis in the manner the
department shall provide."
SECTION 2. Section 12-6-1170 of the 1976 Code, as added by
Act 76 of 1995, is amended to read:
"Section 12-6-1170. (A)(1) An individual is
allowed an annual deduction from South Carolina taxable income
for of not more than three thousand dollars of
retirement income received as follows:
(1) For taxable years after 1992, and beginning on the
first taxable year a taxpayer receives retirement income, the taxpayer
may:
(a) deduct up to three thousand dollars of retirement
income that is included in South Carolina taxable income; or
(b) irrevocably elect to defer the annual retirement
income deduction until the taxable year in which the taxpayer reaches
age sixty-five. Beginning in the year in which the taxpayer
reaches age sixty-five, the taxpayer may deduct up to not
more than ten thousand dollars of retirement income that is
included in South Carolina taxable income.
(2) Taxpayers are deemed to have made the election provided
in subitem (1)(b) and may deduct up to ten thousand dollars of
retirement income included in South Carolina taxable income if:
(a) the taxpayer does not claim a retirement income
deduction before the taxable year he reaches age sixty-five; or
(b) the taxpayer reaches age sixty-five before 1994.
(3) As used in this section, all references to age
sixty-five apply to taxpayers born before 1943. For taxpayers born
in 1943 through 1959, the applicable age for determining the
retirement income deduction is age sixty-six and age sixty-seven for
taxpayers born after 1959.
(4) (2) The term 'retirement income', as used in
this section subsection, means the total of all
otherwise taxable income not subject to a penalty for premature
distribution received by the taxpayer or the taxpayer's surviving
spouse in a taxable year from qualified retirement plans which
include those plans defined in Internal Revenue Code Sections 401,
403, 408, and 457, and all public employee retirement plans of the
federal, state, and local governments, including military retirement.
(5)(3) A surviving spouse receiving retirement
income that is attributable to the deceased spouse shall apply this
deduction in the same manner that the deduction applied to the
deceased spouse. If the surviving spouse also has another retirement
income, an additional retirement exclusion is allowed.
(6)(4) The department shall prescribe the
method of making the election to defer the retirement income
deduction and may require the taxpayer to provide information
necessary for proper administration of this election
subsection.
(B) Beginning for the taxable year during which a resident
individual taxpayer attains the age of sixty-five years, the resident
individual taxpayer is allowed a deduction from South Carolina
taxable income received in an amount not to exceed eleven thousand
five hundred dollars reduced by any amount the taxpayer deducts
pursuant to subsection (A) not including amounts deducted as a
surviving spouse. If a married taxpayer eligible for this deduction
files a joint federal income tax return, then the maximum deduction
allowed is eleven thousand five hundred dollars in the case when
only one spouse has attained the age of sixty-five years and
twenty-three thousand dollars when both spouses have attained such
age."
SECTION 3. Upon approval by the Governor, this act is effective
for taxable years beginning after 1997.
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