Long Term Care Insurance may be State Income Tax Deductibility

//Long Term Care Insurance may be State Income Tax Deductibility

Long Term Care Insurance may be State Income Tax Deductibility

I learned something yesterday that I figured I would share with my readers.  Not sure how many of readers actually own Long Term Care Insurance but I learned something about yet another positive about it.

Before getting into what I learned and want to share, a quick definition of long term care insurance.  Rather than going to an insurance company I figured a definition from the objective third party AARP would be best,

Long-term care refers to the many services beyond medical care and nursing care used by people who have disabilities or chronic (long-lasting) illnesses. Long-term care insurance helps you pay for these services, which can be very expensive. A policy also ensures that you can make your own choices about what long-term care services you receive and where you receive them.

Long Term Care Insurance may be Deductible for State Income Tax Purposes

There are a ton of pros and cons associated with Long Term Care Insurance, but one pro I just learned about was its possible positive result on your state income tax return. It is easy – find your state and go ahead and see if the premiums are deductible.  The information is obtained from State Health Facts.org

AlabamaYesDeductionAlabama residents may deduct the value of all premiums for qualified long-term care insurance policies paid in a given tax year.
AlaskaNot ApplicableState does not tax personal income.
ArizonaNo
ArkansasYesDeductionArkansas residents may deduct the total cost for long-term care insurance policies following the format listed in Section 213 (d)(1)(D) of the federal Internal Revenue Code.
CaliforniaYesDeductionCalifornians may deduct the total cost of long-term care insurance paid in a given tax year following the federal formula implemented through Section 213 (d)(1)(D) of the federal Internal Revenue Code
ColoradoYesCreditColorado residents may be granted a credit equaling 25 percent of the cost paid or $150.00 per long-term care policy.
ConnecticutNo
DelawareNo
District of ColumbiaYesDeductionResidents of Washington, DC may deduct the sum of long-term care insurance premiums paid per year from their single-year gross income, provided that the deduction does not exceed $500.00 per individual.
FloridaNot ApplicableState does not tax personal income.
GeorgiaNo
HawaiiYesDeductionHawaii residents may deduct long-term care insurance cost if those premiums are deductible when determining federal taxable income.
IdahoYesDeductionIdaho residents are permitted to deduct (from their personal taxable income) the sum of long-term care insurance policy premiums paid for themselves, a dependent, or an employee.
IllinoisNo
IndianaYesDeductionIndiana residents may deduct a portion of cost in a given tax year for an eligible long-term care insurance policy.
IowaYesDeductionIowa residents are permitted to deduct the sum of premiums paid in a given tax year for long-term care insurance, provided that those costs are eligible for deduction in accordance with the federal Internal Revenue Code.
KansasYesDeductionResidents of Kansas may deduct up to $500 of long-term care insurance policy costs for the tax year beginning after 12/31/2004. The total deduction amount will increase by $100 for each tax until 12/31/2009.
KentuckyYesDeductionKentucky residents may exclude the sum of all qualified long-term care insurance policy premiums paid in a given tax year from their adjusted gross income prior to calculating tax liabilities for that year.
LouisianaYesCreditLouisiana residents are eligible for a credit equal to 10 percent of the sum of eligible long-term care policy costs paid in a given tax year, provided that credit would not exceed the total tax liability for the same year.
MaineYesBothMaine residents may deduct the sum of all premiums paid for qualified long-term care insurance policies that have been approved by the state. The total amount to be deducted must also have been reduced by any amount claimed for federal tax deduction in the given tax year.  Maine employers are also eligible for an income tax credit against the taxes paid for providing long-term care policies to employees. The credit is equal to the least of (a) $5000; (b) 20 percent of the costs incurred for providing the policies in the given tax year or (c) $100 per participating employee.
MarylandYesCreditMaryland residents can earn a credit equal to 100 percent of the sum of qualified long-term care insurance policy premiums paid in a given tax year, provided the policy covers an individual or  individual’s spouse, parent, stepparent, child, or stepchild. The total credit for each insured policy may not exceed $500.
MassachusettsNo
MichiganNo
MinnesotaYesCreditResidents of Minnesota may be eligible for a $100 credit or a sum equal to 25 percent what is paid for a long-term care insurance policy, provided those are not deducted in determining federal taxable income.
MississippiYesCreditMississippians are allowed a credit against the income taxes equal to twenty-five percent (of the premium costs paid during the taxable year for a qualified long-term care insurance policy on behalf of the individual, the individual’s spouse, the individual’s parent or parent-in-law, or the individual’s dependent.
MissouriYesDeductionMissourians can deduct 50 percent of non-reimbursed premiums for qualified long-term care insurance policies, provided those premium payments are not also itemized deductions for the given tax year.
MontanaYesBothMontana residents may deduct the sum of all long-term care insurance policies paid in a given year for coverage for themselves or their dependents. Residents of the state may also earn a credit for payment of long-term care insurance policy costs made on behalf of a non-dependent, elderly or disabled family member. The credit is based upon the payer’s gross family income for the given tax year.
NebraskaYesDeductionNebraska Long-Term Care Savings Plan Act (2006) allows taxpayers to claim state income tax deductions for contributions they make to a savings plan to be used for long-term care expenses.
NevadaNot ApplicableState does not tax personal income.
New HampshireNot ApplicableState does not tax personal income.
New JerseyYesDeductionResidents of New Jersey are eligible for a deduction of medical expenses that exceed 2 percent of their individual gross incomes for a given tax year.
New MexicoYesDeductionNew Mexico residents are eligible for a tax deduction equal to a part or the sum of the costs paid in a given year for a long-term care insurance policy, provided that the premiums were paid with income that is included in the taxpayer’s adjusted gross income for the given tax year.
New YorkYesCreditNew York residents may receive a credit equal to 20 percent of the sum of the costs paid for a qualified long-term care insurance policy in a given tax year.
North CarolinaYesCreditNorth Carolina residents are eligible for a tax credit totaling 15 percent of all premiums paid in a given tax year for policies attained for the taxpayer, taxpayer’s spouse, or taxpayer’s dependent with a per policy maximum of $350.
North DakotaYesCreditResidents of North Dakota are allowed a credit equal to 25 percent of the sum of premiums paid in a given year towards a long-term care insurance policy for the taxpayer or taxpayer’s spouse, parent, step-parent, or child. The credit amount may not exceed $100 for the given tax year.
OhioYesDeductionOhio residents may deduct the sum of the cost and/or premiums paid during the given tax year for a qualified long-term care insurance policy for the taxpayer, taxpayer’s spouse, or dependents, provided that the sum is not otherwise deducted when computing federal and Ohio adjusted gross income for the given tax year.
OklahomaNo
OregonYesCreditOregon residents can claim a credit for the sum long-term care insurance policy premiums for an individual, parent, dependent, or employee. The credit is equal to the least of (a) 15 percent of the total amount paid; (b) $500 dollars; or (c) $500 dollars times the number of employees (in the case that the policy is taken out by an employer).
PennsylvaniaNo
Rhode IslandNo
South CarolinaNo
South DakotaNot ApplicableState does not tax personal income.
TennesseeNot ApplicableState does not tax personal income.
TexasNot ApplicableState does not tax personal income.
UtahYesDeductionUtah residents are able to deduct the sum or part of all premiums paid for a long-term care insurance policy in a given year, provided that no deductions have been taken for the taxpayer’s long-term care insurance on the federal income tax claim for the given tax year.
VermontNo
VirginiaYesDeductionVirginia residents can deduct 100 percent of the sum of all premiums paid for a long-term care insurance policy in a given year, provided that no deductions have been taken for the taxpayer’s long-term care insurance on the federal income tax claim for the given tax year.
WashingtonNot ApplicableState does not tax personal income.
West VirginiaYesDeductionWest Virginia residents may deduct long-term care insurance policy premiums for the individual, spouse, parent, or other dependent, only if the premium amount cannot be deducted when calculating adjusted gross income.
WisconsinYesDeductionWisconsin residents are able to deduct 100 percent of the annual cost of a long-term care insurance policy (for self or self and spouse), minus the federal gross income deduction for long-term care insurance.
WyomingNot ApplicableState does not tax personal income.

Just a couple notes:

  • Long Term Care Insurance can be VERY expensive.
  • If you own a business, depending on the type of entity, it may be a business deduction!
  • As evidenced by this recent article – You have to watch out who you are doing business with !
By |2013-09-26T15:02:00+00:00December 12th, 2008|Taxes|1 Comment

About the Author:

Evan is the owner of My Journey to Millions which was started to track his journey from a broke debt ridden law school graduate to building a positive balance. Need more Evan? Follow him on Twitter, Contact him or get new posts directly to your email

One Comment

  1. Maxine Weiner September 16, 2010 at 12:14 pm - Reply

    Can you get the 20% credit with NYS and still deduct the premium as a self-employed health insurance premium (up to a certain age related limit)

    thank you

Leave A Comment