Grants a state personal income tax deduction for retirement plan distributions used to purchase long-term care insurance; exempts distributions from individual retirement accounts and individual retirement annuities from state personal income taxation when such distributions are used to purchase long-term health care insurance.
STATE OF NEW YORK
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2329
2023-2024 Regular Sessions
IN SENATE
January 19, 2023
___________
Introduced by Sens. MAYER, BRESLIN, JACKSON, KRUEGER, LIU -- read twice
and ordered printed, and when printed to be committed to the Committee
on Budget and Revenue
AN ACT to amend the tax law, in relation to exempting distributions from
individual retirement accounts and individual retirement annuities
from state personal income taxation when such distributions are used
to purchase long-term health care insurance
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subsection (c) of section 612 of the tax law is amended by
2 adding a new paragraph 3-d to read as follows:
3 (3-d) Distributions received by an individual, not otherwise excluded
4 pursuant to paragraph three or three-a of this subsection, to the extent
5 includable in gross income for federal income tax purposes, which are
6 attributable to personal services performed by such individual from
7 employment, which arise (i) from an employer-employee relationship or
8 (ii) from contributions to a retirement plan which are deductible for
9 federal income tax purposes, to the extent such distributions are used
10 during the taxable year to purchase a policy of long-term care insur-
11 ance, as defined in section one thousand one hundred seventeen of the
12 insurance law, for such individual or a dependent of such individual.
13 Such distributions shall include distributions from an individual
14 retirement account or an individual retirement annuity, as defined in
15 section four hundred eight of the internal revenue code, and distrib-
16 utions from self-employed individual and owner-employee retirement plans
17 which qualify under section four hundred one of the internal revenue
18 code. Provided, however, that any distributions excluded pursuant to
19 this paragraph shall be subtracted from the total amount of premiums
20 paid when computing the amount of allowable credit pursuant to
21 subsection (aa) of section six hundred six of this article.
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD02351-01-3
S. 2329 2
1 § 2. Subsection (aa) of section 606 of the tax law, as amended by
2 section 1 of part P of chapter 61 of the laws of 2005, paragraph 1 as
3 amended by section 1 of part E of chapter 59 of the laws of 2020, is
4 amended to read as follows:
5 (aa) Long-term care insurance credit. (1) Residents. There shall be
6 allowed a credit against the tax imposed by this article in an amount
7 equal to twenty percent of the premiums paid during the taxable year for
8 long-term care insurance, provided that any amount subtracted from
9 federal adjusted gross income pursuant to paragraph three-d of
10 subsection (c) of section six hundred twelve of this article shall be
11 subtracted from the amount of premium paid during the taxable year and
12 the twenty percent credit shall be based upon such recomputed amount of
13 premium paid. The credit amount shall not exceed one thousand five
14 hundred dollars and shall be allowed only if the amount of New York
15 adjusted gross income required to be reported on the return is less than
16 two hundred fifty thousand dollars. In order to qualify for such credit,
17 the taxpayer's premium payment must be for the purchase of or for
18 continuing coverage under a long-term care insurance policy that quali-
19 fies for such credit pursuant to section one thousand one hundred seven-
20 teen of the insurance law. If the amount of the credit allowable under
21 this subsection for any taxable year shall exceed the taxpayer's tax for
22 such year, the excess may be carried over to the following year or years
23 and may be deducted from the taxpayer's tax for such year or years.
24 (2) Nonresidents and part-year residents. In the case of a nonresident
25 taxpayer or a part-year resident taxpayer, the credit determined under
26 this subsection shall be limited to the amount determined by multiplying
27 the amount of such credit by the New York source fraction as set forth
28 in paragraph three of subsection (e) of section six hundred one of this
29 article. The credit as so limited shall be applied as provided in para-
30 graph one of this subsection, provided that any amount subtracted from
31 federal adjusted gross income pursuant to paragraph three-d of
32 subsection (c) of section six hundred twelve of this article and section
33 six hundred thirty-one of this article shall be subtracted from the
34 amount of premium paid during the taxable year and the twenty percent
35 credit shall be based upon such recomputed amount of premium paid.
36 § 3. This act shall take effect immediately and shall apply to taxable
37 years commencing on January first in the year in which this act shall
38 take effect and all subsequent taxable years.
