Report Title:

Long-term Care Tax Credit

Description:

Provides a refundable net income tax credit to encourage the purchase of long-term care insurance. (SB1399 SD2)

THE SENATE

S.B. NO.

1399

TWENTY-SECOND LEGISLATURE, 2003

S.D. 2

STATE OF HAWAII

 


 

A BILL FOR AN ACT

 

RELATING TO A LONG-TERM CARE TAX CREDIT.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows.

"235-   Long-term care tax credit. (a) Each resident individual taxpayer who files an individual income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state individual income tax purposes, may claim a long-term care tax credit against the resident taxpayer's net individual income tax liability for the taxable year for which the individual's income tax return is being filed; provided that a resident individual who has no income or no income taxable under this chapter, and who is not claimed or is not otherwise eligible to be claimed as a dependent by a taxpayer for Hawaii state individual income tax purposes may claim this credit.

(b) The tax credit shall be an amount equal to the phased-in amount of the credit; provided that the credit amount shall not exceed $ for a taxable year; provided further that a husband and wife filing separate tax returns for a taxable year for which a joint return could have been filed by them shall claim only the tax credit to which they would have been entitled under this section had a joint return been filed.

For the purposes of this section:

"Long-term care insurance" shall have the same meaning as in section 431:10H-104.

"Phased-in amount of the credit" is as follows:

(1) In calendar year 2004, ten per cent of the long-term care insurance premium payments made by the resident taxpayer for the taxable year in which the payments were made;

(2) In calendar year 2005, twenty per cent of the long-term care insurance premium payments made by the resident taxpayer for the taxable year in which the payments were made; and

(3) In calendar year 2006 and thereafter, thirty per cent of the long-term care insurance premium payments made by the resident taxpayer for the taxable year in which the payments were made.

(c) If a deduction is taken under this chapter pursuant to section 213 (with respect to the deduction for long-term costs and insurance contract premiums) of the Internal Revenue Code, no tax credit shall be allowed for that portion of the costs for which the deduction was taken.

(d) The credit shall apply to premium payments for a long-term care insurance contract that covers:

(1) The taxpayer;

(2) The taxpayer's dependent as defined in section 152 of the Internal Revenue Code;

(3) The taxpayer's spouse;

(4) A son or daughter of the taxpayer;

(5) A stepson or stepdaughter of the taxpayer;

(6) The father or mother of the taxpayer; and

(7) A stepfather or stepmother of the taxpayer.

(e) For the purpose of this credit, "net income tax liability" means net income tax liability reduced by all other credits allowed under this chapter. If the tax credits claimed by a resident taxpayer exceed the amount of income tax payment due from the resident taxpayer, the excess of credits over payments due shall be refunded to the resident taxpayer; provided that tax credits properly claimed by a resident individual who has no income tax liability shall be paid to the resident individual; and provided further that no refunds or payment on account of the tax credit allowed by this section shall be made for amounts less than $1.

(f) All claims, including any amended claims, for tax credits under this section shall be filed on or before the end of the twelfth month following the close of the taxable year for which the credit may be claimed. Failure to comply with the foregoing provision shall constitute a waiver of the right to claim the credit."

SECTION 2. New statutory material is underscored.

SECTION 3. This Act shall take effect upon its approval and shall apply to taxable years beginning after December 31, 2003.