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Financial Planning > Tax Planning

Maryland considers LTCI tax credit bill

By Allison Bell

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State lawmakers in Maryland are reviving the fight for a multiyear long-term care insurance (LTCI) tax credit.

Sen. Katherine Klausmeier, D-Baltimore, brought the proposal back as S.B. 478.

Today, Maryland lets a taxpayer have a credit for up $500 in LTCI premiums for the first year the coverage is in effect.

If S.B. 478 takes effect as written, it will cut the value of the state’s LTCI tax credit to $250 in the first year, then increase the value to $500 in later years.

A taxpayer who was paying for eligible LTCI coverage could use the credit every year the coverage stayed in effect.

The credit would apply to any LTCI premiums that a taxpayer could deduct from federal taxable income.

A taxpayer could use the S.B. 478 credit to help pay for LTCI coverage for the taxpayer, a spouse, a parent, a step-parent, a child or a step-child.

If a taxpayer was paying LTCI premiums for two or more people, the taxpayer could take a separate S.B. 478 credit for each individual insured.

S.B. 478 is in the state Senate Budget and Taxation Committee.

Klausmeier has sponsored similar bills before, including S.B. 703, which was introduced in February 2011; S.B. 35, which was introduced in January 2012; and S.B. 23, which was introduced in November 2012. The bills died in the Budget and Taxation Committee without coming up for a recorded vote.

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