ADMINISTRATIVE NOTICE 91-17


Subject:	Impact of Federal Limits on Personal Exemption Allowance Upon West Virginia Personal Exemption Allowances

	The Omnibus Budget Reconciliation Act of 1990 contains a provision phasing out federal personal exemption allowances for high income taxpayers beginning in 1991.  A personal exemption phase out begins at income levels of $100,000 for a single filer, $125,000 for a head of household filer, $150,000 for a married joint filer and $75,000 for a married separate filer.  The full phase out ($ 0 exemption allowance) occurs at income levels exceeding $222,500 for a single filer, $247,500 for a head of household filer, $272,500 for a married joint filer and $136,250 for a married separate filer.

	Because the West Virginia Personal Income Tax Statute ties into federal definitions of income, deductions and exemptions, a question arises concerning the State's response to changes in the federal personal exemption allowance.  How will the federal changes affect the $2,000 State personal exemption allowance for high income taxpayers?

	State law provides that "a resident individual shall be allowed a West Virginia exemption of" [$2,000] "for each exemption for which he is entitled to a deduction for the taxable year for federal income tax purposes" (WV Code Chapter 11, Article 21, Section 16 (a)).

	A reduced federal personal exemption allowance has no effect upon the value of a State personal exemption allowance, since the value of the State personal exemption ($2,000) is not tied to the value of the federal exemption, but is instead set by State legislation.  A full State personal exemption allowance exists, as long as the individual is entitled to a similar deduction for federal income purposes or would have been entitled to such a deduction were it not for the post-1990 federal phase out of such allowance.

	Therefore, the post-1990 federal personal exemption phase out has no effect upon the West Virginia personal exemption allowance.  The State personal exemption allowance remains at $2,000 for all full-year residents.

	For additional information, please contact our Taxpayer Services Division.



							_____________________________________
							 Alan L. Mierke
							 Assistant Secretary/
							  Assistant Tax Commissioner


							  Issued: August 27, 1991

Department of Tax and Revenue		Operator on Duty 8:30 a.m. - 4:30 p.m.
Taxpayer Services Division		Monday through Friday
P.O. Drawer 3784				Phone:	(304) 348-3333
Charleston, WV  25337-3784		1-800-642-9016 (within W. Va. only)
						Telecopier:	(304) 348-2324