If your state offers a full, 100% deduction for long-term care insurance premiums, and your state income tax rate is, for example, 7% then your taxes would be reduced by $280 if you paid long-term care insurance premiums of $4,000. If your state offers a tax credit of $100- then the state will "pay" the first $100 of your premium.
| State | Tax Incentive |
Description Tax Treatment |
|
Alabama |
Deduction |
Permits a deduction for the premium paid for qualified long term care coverage under a policy that meets the requirements of Alabama Code Section 27-47-2. |
| Arkansas | Deduction | Adopts section 213 of Internal Revenue Code for computing medical and dental expense deduction under state income tax law |
|
California |
Deduction |
Permits the same tax deduction as is allowed for federal income tax purposes |
|
Colorado |
Credit |
State income tax credit equal to the lesser of 25% of premiums paid for a long term care insurance policy or $150 per policy. Individuals who qualify for the credit are those with federal taxable income less than $50,000 ($100,000 for joint filers claiming a credit for 2 policies.) A long term care policy must meet Colorado’s definition of long term care. |
| District of Columbia | Deduction | Effective 1/21/05, permits a deduction from gross income the amount an individual pays annually in long-term care premiums, provided that the deduction shall not exceed $500.00 per year, per individual, whether the individual files individually or jointly. |
|
Hawaii |
Deduction |
For tax years beginning on or after January 1, 1999, an individual state tax deduction is allowed for long term care insurance premiums. This deduction is limited in the same manner as the deduction on the federal level, and is also only available to the extent that all medical expenses, including long term care premium, exceed 7.5% of Hawaii Adjusted Gross Income. |
|
Idaho |
Deduction |
For tax years beginning on or after January 1, 2004, allows an individual taxpayer to deduct the full amount of premiums paid for long term care insurance for the taxpayer, a dependent or an employee. The deduction may be taken for a federally tax-qualified long term care insurance policy meeting Idaho’s definition of long term care insurance. |
|
Indiana |
Deduction |
For tax years beginning on or after January 1, 2000, an individual taxpayer is permitted to deduct an amount equal to the eligible portion of premiums paid during the taxable year by the taxpayer for a qualified long term care policy (as defined in the Indiana Code), for the taxpayer, the taxpayer’s spouse, or both. For Qualified Partnership Policies Only. |
|
Iowa |
Deduction |
Adopt section 213 of Internal Revenue Code for computing medical and dental expense under state income tax law. |
| Kansas | Deduction | For the tax years beginning after 12/31/04 allows for the deduction for state income tax purposes from federal adjusted gross income, in an amount not to exceed $500 of the premium costs for LTC insurance. The deduction amount increases $100 for each year thereafter until the amount the amount reached is $1,000. |
|
Kentucky |
Exclusion |
For tax years beginning on or after January 1, 1999, a taxpayer may exclude from Kentucky Adjusted Gross Income any amounts paid for long term care insurance as defined in the Kentucky code. |
|
Maine |
Deduction |
For tax years beginning on or after January 1, 2004 a taxpayer may take a state income tax deduction an amount equal to the total premiums spent for LTC insurance, as long as the amount subtracted is reduced by any amount claimed as a deduction for federal income tax purposes. |
|
|
Credit |
Tax credit for employers providing long term care benefits to employees under a federally tax-qualified policy equal to the lowest of $5000; 20% of costs; or $100 for each covered employee. |
|
Maryland |
Credit |
For tax years beginning on or after January 1, 1999, an employer may claim a tax credit for a portion of the costs incurred by the employer during the taxable year to provide long term care insurance as part of an employee benefit package. The credit is equal to the lesser of: 1) 5% of the employers cost in providing a Long Term Care Benefit, 2) $5000, or 3) $100 for each employee in the state covered by Long Term Care Insurance under the Employer’s plan. |
| Credit | For tax year beginning on or after January 1, 2000, an individual may claim a credit equal to 100% of “eligible long term care premiums” paid during the taxable year for long term care insurance covering the individual or the individual’s spouse, parent, stepparent, child or stepchild. Credit may not exceed $500 for each insured, and may not be claimed with respect to an insured if the insured individual was covered by long term care insurance at any time before July 1, 2000, or the credit has been claimed with respect to that insured individual by any taxpayer for any prior taxable year. | |
|
Minnesota |
Credit |
For tax years beginning on or after January 1, 1999, a taxpayer is allowed a tax credit for premiums paid during the tax year for long term care insurance. The Credit for each policy is equal to the lesser of 25% of premiums paid or the extent not deducted in determining federal taxable income OR $100. Maximum allowable credit per year is $200 for couples filing jointly and $100 for all other filers. |
|
Missouri |
Deduction |
For tax years beginning on or after January 1, 2000, an individual may take a state tax deduction equal to 50% of unreimbursed payments for qualified long term care insurance premiums (as defined by Missouri LTC statutes) which are not included in an individual’s itemized deductions. |
|
Montana |
Deduction |
A deduction is generally allowed for the entire amount of qualified long term care premiums paid by the taxpayer. |
| Credit | A limited credit is available for expense of caring for certain elderly family members (which includes premiums paid for long term care insurance coverage). The amount of credit is determined based on the taxpayer’s adjusted gross income and cannot exceed $5,000 per qualifying family members in a taxable year ($10,000 for two or more family members). | |
| New Jersey | Deduction | Allows a deduction for medical expenses (including long term care insurance premiums), to the extent such expenses exceed 2% of taxpayer’s gross income. |
| New Mexico | Deduction | Permits a deduction for the premium paid for a qualified long term care insurance contract as defined in Internal Revenue Code section 7702(B), as part of unreimbursed or uncompensated medical care expenses. Total medical expense deduction is limited, based on income level. |
|
New York |
Credit- Amended 8/20/04 |
Allows a tax credit equal to 20% of the premium paid during the taxable year for long term care insurance (provided the sitused policy has been approved by the Superintendent of Insurance), provided policy qualifies for such credit pursuant to Section 1117. If the amount of credit allowable under this subsection for any taxable year shall exceed the taxpayer’s tax for such year, the excess may be carried over to the following year or years and may be deducted from the taxpayer’s tax for such year or years. |
|
North Dakota |
Credit |
Credit against an individual’s tax liability provided to each taxpayer in the amount of 25% of any premiums paid by the taxpayer for long term care insurance coverage for the taxpayer, a taxpayer’s spouse, parent, stepparent, or child. The credit cannot exceed $100 for each insured individual in any taxable year. |
|
Ohio |
Deduction |
Generally allows a deduction for the amount paid for qualified long term care insurance for the taxpayer, his spouse, and dependents. |
| Oklahoma | Deduction | Permits the same tax deduction as is allowed for federal income tax purposes. |
|
Oregon |
Credit |
Permits an income tax credit equal to the lesser of 15% of long term care insurance premiums paid by a taxpayer or $500 if the long term care insurance is covering the individual and dependents or parents. In order for the credit to be available the policy must be issued after January 1, 2000. The credit is not refundable and cannot be carried forward. |
|
Utah |
Deduction |
Permits a deduction for all resident or nonresident taxpayers for all premiums paid for long term care insurance as defined under the Utah Code. |
|
Virginia |
Deduction |
The amount paid in long term care premiums may be deducted from federal adjusted gross income in computing VA taxable income. |
|
West Virginia |
Deduction |
A deduction is allowed for resident taxpayers for amounts paid during the taxable year for premiums for long term care insurance as defined in the West Virginia Code, for taxpayer, taxpayer’s spouse, parent, or dependent, from the federal adjusted gross income reported on the WVA state tax return. |
|
Wisconsin |
Deduction |
Allows a deduction for up to 100 percent of the cost of a long term care insurance policy. |
|
This information is not a substitute for expert tax advice. Please contact a tax professional for complete details
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