SB 0416 Authorizes state income tax deduction for health insurance costs of self-employed individual, spouse and dependents
LR Number:S1850.01I Fiscal Note:1850-01
Committee:Ways and Means
Last Action:03/23/99 - Hearing Cancelled S Ways & Means Committee Journal page:
Effective Date:January 1, 1999
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Current Bill Summary

SB 416 - This act authorizes a state income tax deduction for health insurance costs incurred by a self-employed individual for the individual and the individual's spouse and dependents.

Current federal law permits the federal deduction equal to 60% in 1999, 2000, and 2001, 70% in 2002, and 100% in 2003 and thereafter for costs paid by a self-employed individual for medical insurance on the individual, the individual's spouse and any dependents. The remaining amounts can be taken as an itemized medical expense on the federal return, subject to the 7.5% of adjusted gross income floor. The federal deduction is not allowed to the extent it exceeds the individual's earned income from the trade or business offering the coverage, and individuals who are eligible to participate in any subsidized health plan maintained by any employer of that individual or of the individual's spouse are not entitled to the deduction.

This act authorizes the deduction for health insurance costs if the amounts qualify as deductible under the Internal Revenue Code, regardless of whether the taxpayer has in fact already deducted those amounts on the federal return for that taxable year. The deductible amounts track those of the federal law; 60% deductible through 2001, 70% in 2002, and 100% thereafter.

The act would become effective on January 1, 1999, and apply to all taxable years beginning after December 31, 1998.