BILL ANALYSIS AND FISCAL IMPACT REPORT	Page 1 of  2

DATE:  February 20, 2001	Submitted by: TAXATION AND REVENUE DEPT.
	T. GLENN ELLINGTON, SECRETARY
BILL NUMBER: HB - 841

SPONSOR: Representative Vigil

BILL SHORT TITLE: Increase 65 and Over Exemption Amount

DESCRIPTION: The bill proposes that the current $8,000 phased-down exemption from income for taxpayers 65 and over be increased to $10,000 and that the floor and ceiling amounts also be increased. In the case of single taxpayers, the floor is increased from $18K to $24K and the ceiling increased from $28,500 to $42,000. For married joint taxpayers, the floor is increased from $30,000 to $40,000 and the ceiling from $51K to $67K.

EFFECTIVE DATE: applicable for tax years beginning on or after January 1, 2001.

FISCAL IMPACT (Thousands of dollars):  		Note: Parenthesis ( ) indicate a revenue loss:

		Recurring or		
Estimated Impact on Revenues	Nonrecurring	Funds 	
	 FY 2002 	Full Year	     Impact     t     	             Affected          .             	
	(6,000)	(6,200)	Recurring	General Fund	

ADMINISTRATIVE IMPACT: minimal. These amounts are published in a table with the tax instructions, which are updated every year. Some systems reprogramming will be required.

OTHER IMPACTS AND ISSUES:
1.	
	Current Returns w/ deduction	Current Liability	Proposed Liability	Decrease in Liab	% Decrease	Decrease per Return	
Filing Status							
    Single	 28,623	 24,863	 23,050	 (1,813)	 -7.3%	 ($63.34)	
    Married Joint	 33,290	 62,355	 58,090	 (4,265)	 -6.8%	 ($128.12)	
    Married Separate	 259	 885	 861	 (24)	 -2.7%	 ($92.66)	
    Head of Household	 1,700	 813	 696	 (117)	 -14.4%	 ($68.82)	
	 63,872	 88,916	 82,697	 (6,219)	 -7.0%	 ($97.37)	

							
AGI							
               0 to 8,000	16,511	70	62	 (8)	 -11.4%	 ($0.48)	
      8,000 to 16,000	 15,920	81	37	 (44)	 -54.3%	 ($2.76)	
    16,000 to 24,000	 14,061	722	218	 (504)	 -69.8%	 ($35.84)	
    24,000 to 32,000	 7,546	2,168	1,061	 (1,107)	 -51.1%	 ($146.70)	
            Over 32,000	 9,834	85,874	81,317	 (4,557)	 -5.3%	 ($463.39)	
	 63,872	 88,915	 82,695	 (6,220)	 -7.0%	 ($97.38)	

2.	This 65 and over deduction was enacted in 1985, but beginning with taxable years beginning on or after January 1, 1987. This was the era in which the Internal Revenue Code eliminated an extra personal exemption for taxpayers aged 65 and over. Neither the deduction amounts, nor the floors and ceilings have changed since 1987. The dollar, however, is currently worth about 70% of its 1987 value.

3.	For the 1998 tax year, the deduction saved elderly taxpayers about $5.8 million. Thus, this proposal represents a 45% real increase in the value of the deduction from 1987 levels and slightly more than double the current value.