Tax & AccountingMarch 09, 2021

Introduced Legislation Would Create Tax on Unearned Income in Wyoming

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Introduced Legislation Would Create Tax on Unearned Income in Wyoming

Recently introduced legislation in Wyoming would impose a tax on unearned income. If enacted, the provisions of H.B. 138 would be effective for tax years beginning January 1, 2022.

Since becoming the 44th state in 1890, Wyoming has never imposed an income tax.

What Constitutes “Unearned Income?”

Under the bill, “unearned income” means any income other than earned income, including:

  • interest;
  • dividends; and
  • capital gain distributions, except for gains generated from the sale of a primary residence.

What is the Proposed Tax Rate?

If enacted, Wyoming would impose an annual tax on both corporations and individuals at a rate of 4% on all taxable unearned income that is allocated and apportioned to Wyoming. The first $200,000 of unearned income would be exempt.

Recent Attempts to Create an Income Tax

Many attempts have been made to create an income tax system, including several efforts in just the past few years.

For example, in 20182019, and 2020, proposed bills would have created a tax on both business and personal income. If enacted, the tax would have been imposed at a rate of 4% on all taxable income over $200,000. However, these bills either were not considered for an introduction vote or had otherwise died in committee.

An additional attempt made in 2019 was slightly more successful in getting off the ground, but ultimately failed. H.B. 220 would have imposed a 7% tax on retailers and accommodation and food service providers with over 100 shareholders. The bill passed the House of Representatives but failed in Senate committee.

By Amber Harker, J.D.

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