House of Representatives

HB 2133

individual health insurance; tax incentive

Sponsors: Representative May

DPA	Committee on Ways and Means
X	Committee on Financial Institutions and Insurance
	Caucus and COW
	As Passed the House

HB 2133 allows all amounts for individual health insurance premium costs to be subtracted from Arizona gross income for individual income tax purposes.

History

Since 1995, the Legislature has allowed a personal income tax deduction for all medical costs for filers who opt to use itemized deduction in lieu of a standard deduction. The allowed medical care costs are the same as what is permitted under federal code, which includes costs for individual health insurance premiums. Federal itemized deductions are limited to those expenses over 7.5% of federal adjusted gross income. Under federal law, a self-employed person is allowed a deduction for 60% of health insurance premium costs in tax years 2000 and 2001. This is scheduled to increase to 70% in 2002 and 100% in 2003 and thereafter.

This bill will allow all individual taxpayers, even those using the standard deduction, to subtract health insurance premiums from their Arizona adjusted gross income.

JLBC was unable to determine the fiscal impact of the bill due to lack of reliable data.

Provisions

· Allows a personal income tax subtraction for individuals from Arizona gross income for individual health insurance premium costs paid by the taxpayer beginning in tax year 2002.

· The subtraction is not allowed if the health insurance premium costs are already excluded or deducted in computing Arizona taxable income.

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45th Legislature

First Regular Session 2 February 19, 2001

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