SF1399

Purpose

• To amend Minnesota tax law so that the long-term care insurance premium credit for individual income tax is changed, including how the credit is calculated and limited.

Main Provisions

• Credit basis: A taxpayer may claim a credit against the tax for long-term care insurance policy premiums paid during the tax year.
• Credit rate: The credit equals 25 percent of premiums paid, to the extent that those premiums were not already deducted when determining taxable net income.
• Policy limit: A credit may be claimed for only one policy per qualified beneficiary.
• Per-beneficiary maximum: The credit per qualified beneficiary is capped at $100,250.
• Total annual limit: The combined credit for a taxpayer is limited to $200,500 for married couples filing jointly, or $100,250 for all other filers.
• Nonresident/part-year resident allocation: For nonresidents or part-year residents, the credit is allocated based on a percentage determined under Minnesota Statutes section 290.06, subdivision 2c, paragraph e.
• Scope: Applies to premiums paid for long-term care insurance policies during the tax year and is a credit against the individual income tax.

Significant Changes to Existing Law

• Establishes new maximum credit amounts (per-beneficiary and total) for the long-term care insurance premium credit.
• Specifies that the credit is only for one policy per qualified beneficiary.
• Introduces allocation rules for nonresidents and part-year residents to determine their credit.

Administrative Notes

• The provision references Minnesota Statutes 2024, section 290.0672, subdivision 2, and uses the same framework for qualification, calculation, and allocation (including connection to nonresident-part-year resident rules).

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Relevant Terms - long-term care insurance credit - premiums - 25 percent - determined against taxable net income - qualified beneficiary - policy - per-beneficiary maximum - $100,250 - total annual limit - $200,500 - married filing jointly - nonresident - part-year resident - allocation - Minnesota Statutes 2024 - section 290.0672, subdivision 2 - tax year - taxable net income