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1998 SESSION

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983094753
SENATE BILL NO. 564 Offered January 26, 1998 A BILL to amend the Code of Virginia by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered 58.1-339.4, relating to earned-income tax credit. ----------
Patrons-- Walker, Miller, Y.B., Quayle and Schrock; Delegates: Croshaw, Jones, J.C., McDonnell, Robinson and Spruill
---------- Referred to the Committee on Finance ----------

Be it enacted by the General Assembly of Virginia:

1. That the Code of Virginia is amended by adding in Article 3 of Chapter 3 of Title 58.1 a section numbered 58.1-339.4 as follows:

§ 58.1-339.4. Earned-income tax credit.

Any individual whose Virginia taxable income does not exceed $19,000 shall be allowed a credit for earned income against the tax levied pursuant to § 58.1-320. Any individual whose credit exceeds his tax liability shall receive a refund equal to the amount the credit exceeds the tax liability. The allowable credit amount shall be equal to a percentage of the federal earned-income credit allowed the individual for the taxable year under § 32 (a) (1) of the Internal Revenue Code, using the percentages under § 32 (b) with the limitation contained in § 32 (a) (2), as follows:

1. Individuals with Virginia taxable income $11,000 or less shall be allowed a credit equal to ten percent of the federal earned-income credit;

2. Individuals with Virginia taxable income in excess of $11,000 but not in excess of $12,000 shall be allowed a credit equal to nine percent of the federal earned-income credit;

3. Individuals with Virginia taxable income in excess of $12,000 but not in excess of $13,000 shall be allowed a credit equal to eight percent of the federal earned-income credit;

4. Individuals with Virginia taxable income in excess of $13,000 but not in excess of $14,000 shall be allowed a credit equal to seven percent of the federal earned-income credit;

5. Individuals with Virginia taxable income in excess of $14,000 but not in excess of $15,000 shall be allowed a credit equal to six percent of the federal earned-income credit;

6. Individuals with Virginia taxable income in excess of $15,000 but not in excess of $16,000 shall be allowed a credit equal to five percent of the federal earned-income credit;

7. Individuals with Virginia taxable income in excess of $16,000 but not in excess of $17,000 shall be allowed a credit equal to four percent of the federal earned-income credit;

8. Individuals with Virginia taxable income in excess of $17,000 but not in excess of $18,000 shall be allowed a credit equal to three percent of the federal earned-income credit; and

9. Individuals with Virginia taxable income in excess of $18,000 but not in excess of $19,000 shall be allowed a credit equal to two percent of the federal earned-income credit.

In the case of a nonresident taxpayer, the amount of the credit allowed under this section shall not exceed the nonresident's Virginia tax liability. In the case of a part-year resident taxpayer whose credit exceeds his tax liability, any refund amount shall be limited to the amount of the excess multiplied by a fraction, the numerator of which is federal adjusted gross income for the period of Virginia residence, and the denominator of which is federal adjusted gross income for the entire taxable year.

2. That the provisions of this act shall be effective for taxable years beginning on and after January 1, 1998.