Establishes a state non refundable income tax credit equal to 50 per cent of premium costs paid, up to a maximum of $1,000 per taxable year, during the taxable year for a qualified long-term care insurance contract as defined in section 7702B of the Internal Revenue Code. (SD1)

A BILL FOR AN ACT

SECTION 1. Chapter 235, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§235- Long-term care insurance tax credit. (a) Each resident individual taxpayer who files an income tax return for a taxable year, and who is not claimed or is not otherwise eligible to be claimed as a dependent by another taxpayer for Hawaii state income tax purposes, may claim a long-term care insurance tax credit against the resident taxpayer's income tax liability for the taxable year for which the income tax return is being filed. The tax credit shall be in an amount equal to fifty per cent of the premium costs paid by the taxpayer during the taxable year for a qualified long-term care insurance contract as defined in section 7702B of the Internal Revenue Code that covers the taxpayer, a dependent as defined in section 152 of the Internal Revenue Code, the taxpayer's spouse, or the taxpayer's parent. The amount of the tax credit shall not exceed $1,000 in any taxable year. No claim for a tax credit shall be made under this section for any premium costs for qualified long-term care insurance deducted under section 213 of the Internal Revenue Code, operative under this chapter.

(b) If the tax credit claimed by the taxpayer under this section exceeds the amount of the income tax payments due from the taxpayer, the excess of credit over tax liability may be used as a credit against the taxpayer's tax liability in subsequent taxable years until exhausted; provided that the tax credit properly claimed by a taxpayer who has no income tax liability shall be paid to the taxpayer; and provided that no refunds or payments on account of the tax credit allowed by this section shall be made for amounts less than $1.

(c) The director of taxation shall prepare any forms that may be necessary to claim a credit under this section, may require proof of the claim for the tax credit, and may adopt rules pursuant to chapter 91.

(d) All of the provisions relating to assessments and refunds under this chapter and under section 231-23(c)(1) shall apply to the tax credit under this section.

(e) Claims for the tax credit under this section, including any amended claims, shall be filed on or before the end of the twelfth month following the taxable year for which the credit may be claimed."

SECTION 2. New statutory material is underscored.