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HF355 (Legislative Session 94 (2025-2026))

Maximum long-term care insurance credit increased.

Related bill: SF1399

AI Generated Summary

Purpose

This bill changes Minnesota law to provide a larger tax credit for long-term care insurance premiums paid by residents. It aims to encourage people to purchase long-term care insurance by offering a bigger reduction in taxes owed.

Main Provisions

  • Credit source and amount:

    • Taxpayers receive a credit against their Minnesota income tax for long-term care insurance policy premiums paid during the tax year.
    • The credit equals 25% of premiums paid, and only the portion not deducted when calculating taxable net income is eligible.

  • Per-policy and per-beneficiary limits:

    • A taxpayer may claim a credit for only one policy for each qualified beneficiary.
    • The maximum credit per qualified beneficiary is $100,250.

  • Annual credit limits by filing status:

    • For married couples filing jointly, the maximum total credit for the year is $200,500.
    • For all other filers (e.g., single, head of household), the maximum total credit is $100,250.

  • Allocation for nonresidents:

    • For a nonresident or part-year resident, the credit is allocated based on the percentage described in Minnesota Statutes (section 290.06, subdivision 2c, paragraph e).

Significant Changes to Existing Law

  • Increases the maximum long-term care insurance credit available to eligible taxpayers and specifies per-beneficiary and per-filing-status caps.
  • Maintains the 25% credit rate and the rule that only premiums not deducted in determining taxable net income count toward the credit.
  • Adds explicit guidance on how the credit is allocated for nonresidents or part-year residents.

Practical Impact

  • Taxpayers who pay for long-term care insurance premiums may receive a larger credit against their Minnesota income tax than under prior law.
  • Individuals must be mindful of the per-beneficiary and total annual caps when planning to claim the credit.
  • Nonresidents or part-year residents will have their credit allocation determined using a specific apportionment method.

Additional Details

  • The credit remains a credit against tax owed (not a deduction from income).
  • The policy and beneficiary rules remain, with the new maximums applying per beneficiary and per filing status.

Relevant Terms

  • long-term care insurance premium
  • credit against the tax
  • 25 percent credit rate
  • not deducted in determining taxable net income
  • one policy per qualified beneficiary
  • maximum per qualified beneficiary: $100,250
  • maximum total credit for married couples filing jointly: $200,500
  • maximum total credit for all other filers: $100,250
  • nonresident or part-year resident
  • allocation based on percentage (section 290.06 subdivision 2c paragraph e)

Bill text versions

Actions

DateChamberWhereTypeNameCommittee Name
February 13, 2025HouseActionIntroduction and first reading, referred toTaxes
February 20, 2025HouseActionAuthor added
March 12, 2025HouseActionAuthor added

Citations

 
[
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill amends Minnesota Statutes 2024 section 290.0672, subdivision 2 to modify the long-term care insurance credit. It continues to set a credit equal to 25 percent of premiums paid but changes the credit caps: per-qualified beneficiary maximum is 100 250; total per year maximum is 200 500 for joint filers and 100 250 for all other filers. It also requires allocation for nonresidents/part-year residents based on the percentage calculated under Minnesota Statutes section 290.06, subdivision 2c, paragraph e.",
      "modified": [
        "Increases the per-beneficiary cap to 100 250 and total year cap to 200 500 for joint returns and 100 250 for all other filers; retains 25% credit and one policy per qualified beneficiary; continues to allocate nonresident credits using 290.06 subdivision 2c paragraph e."
      ]
    },
    "citation": "290.0672",
    "subdivision": "2"
  },
  {
    "analysis": {
      "added": [],
      "removed": [],
      "summary": "This bill references Minnesota Statutes 2024 section 290.06, subdivision 2c, paragraph e, to allocate the long-term care insurance credit for nonresident or part-year residents.",
      "modified": []
    },
    "citation": "290.06",
    "subdivision": "2c paragraph e"
  }
]

Progress through the legislative process

17%
In Committee

Sponsors

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