Long-Term Care Insurance Tax Incentives - Kaiser State Health Facts

Long-Term Care Insurance Tax Incentives Offered by States, 2008

Note: You can also click on a column header to rank by that column.
Click again to reverse the order.

	Does the state offer tax incentives for the purchase of long-term care insurance?	Is the tax incentive a tax credit or deduction?	Notes

United States	29+DC	29+DC

Alabama	Yes	Deduction	Alabama residents may deduct the value of all premiums for qualified long-term care insurance policies paid in a given tax year.
Alaska	Not Applicable		State does not tax personal income.
Arizona	No
Arkansas	Yes	Deduction	Arkansas residents may deduct the total cost of premiums for long-term care insurance policies following the format listed in Section 213 (d)(1)(D) of the federal Internal Revenue Code.
California	Yes	Deduction	Californians may deduct the total cost of long-term care insurance premiums paid in a given tax year following the federal formula implemented through Section 213 (d)(1)(D) of the federal Internal Revenue Code
Colorado	Yes	Credit	Colorado residents may be granted a credit equaling 25 percent of the premiums paid or $150.00 per long-term care policy.1
Connecticut	No
Delaware	No
District of Columbia	Yes	Deduction	Residents 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.
Florida	Not Applicable		State does not tax personal income.
Georgia	No
Hawaii	Yes	Deduction	Hawaii residents may deduct long-term care insurance premiums if those premiums are deductible when determining federal taxable income.
Idaho	Yes	Deduction	Idaho 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.
Illinois	No2
Indiana	Yes	Deduction	Indiana residents may deduct a portion of premiums paid in a given tax year for an eligible long-term care insurance policy.
Iowa	Yes	Deduction	Iowa residents are permitted to deduct the sum of premiums paid in a given tax year for long-term care insurance, provided that those premiums are eligible for deduction in accordance with the federal Internal Revenue Code.
Kansas	Yes	Deduction	Residents of Kansas may deduct up to $500 of long-term care insurance policy premium 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.
Kentucky	Yes	Deduction	Kentucky 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.
Louisiana	Yes	Credit	Louisiana residents are eligible for a credit equal to 10 percent of the sum of eligible long-term care policy premiums paid in a given tax year, provided that credit would not exceed the total tax liability for the same year.3
Maine	Yes	Both	Maine 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.
Maryland	Yes	Credit	Maryland 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.
Massachusetts	No
Michigan	No
Minnesota	Yes	Credit	Residents of Minnesota may be eligible for a $100 credit or a sum equal to 25 percent of the premiums paid for a long-term care insurance policy, provided those are not deducted in determining federal taxable income.
Mississippi	Yes	Credit	Mississippians 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.
Missouri	Yes	Deduction	Missourians 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.
Montana	Yes	Both	Montana 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 premiums 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.
Nebraska	Yes	Deduction	Nebraska 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.
Nevada	Not Applicable		State does not tax personal income.
New Hampshire	Not Applicable		State does not tax personal income.
New Jersey	Yes	Deduction	Residents 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.4
New Mexico	Yes	Deduction	New Mexico residents are eligible for a tax deduction equal to a part or the sum of premiums 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 York	Yes	Credit	New York residents may receive a credit equal to 20 percent of the sum of premiums paid for a qualified long-term care insurance policy in a given tax year.5
North Carolina	Yes	Credit	North 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 Dakota	Yes	Credit	Residents 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.
Ohio	Yes	Deduction	Ohio 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.
Oklahoma	No
Oregon	Yes	Credit	Oregon 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).6
Pennsylvania	No
Rhode Island	No
South Carolina	No
South Dakota	Not Applicable		State does not tax personal income.
Tennessee	Not Applicable		State does not tax personal income.
Texas	Not Applicable		State does not tax personal income.
Utah	Yes	Deduction	Utah 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.
Vermont	No
Virginia	Yes	Deduction	Virginia 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.
Washington	Not Applicable		State does not tax personal income.
West Virginia	Yes	Deduction	West 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.
Wisconsin	Yes	Deduction	Wisconsin 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.
Wyoming	Not Applicable		State does not tax personal income.

(show/hide notes)

Notes:	Data as of February 29, 2008.
Sources:	Health Policy Tracking Service, a service of Thomson West, available at http://www.netscan.com.
Footnotes:	State residents whose taxable single income is less than $50,000 or two-person joint income is less than $100,000 are eligible for the credit. Illinois' former tax deduction provision expired December 31, 2004. In order to earn a credit, the taxpayer must fill out a form and submit it to the state Department of Revenue for approval. New Jersey code defers to the federal tax code definitions of "medical expenses," which may include qualified long-term care insurance policies. If the amount of the credit exceeds the taxpayer's tax for a given year, the remainder may be carried over to the following year(s). The credit may not exceed the taxpayer's tax liability, nor may it be carried over into subsequent years.

Help

Rank By: