SB662: relative to an exemption from interest and dividends taxes for medical expenses.

SB 662-FN - AS INTRODUCED

2020 SESSION

20-3001

10/05

SENATE BILL 662-FN

AN ACT relative to an exemption from interest and dividends taxes for medical expenses.

SPONSORS: Sen. Giuda, Dist 2; Sen. Ward, Dist 8; Sen. Birdsell, Dist 19; Sen. Carson, Dist 14; Sen. Reagan, Dist 17; Rep. Weyler, Rock. 13; Rep. L. Ober, Hills. 37; Rep. Major, Rock. 14; Rep. Abrami, Rock. 19

COMMITTEE: Ways and Means

ANALYSIS

This bill allows for an exemption from income subject to the tax on interest and dividends of a qualifying amount paid for medical care.

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

20-3001

10/05

STATE OF NEW HAMPSHIRE

In the Year of Our Lord Two Thousand Twenty

AN ACT relative to an exemption from interest and dividends taxes for medical expenses.

Be it Enacted by the Senate and House of Representatives in General Court convened:

1 New Paragraph; Taxation of Incomes; Exemption for Medical Expenses. Amend RSA 77:5 by inserting after paragraph IV the following new paragraph:

V. The amount of expenses paid for medical care during the tax year allowed as a deduction from federal taxable income under Section 213 of the United States Internal Revenue Code of 1986, as amended.

2 Applicability. This act shall apply to taxable periods ending on or after December 31, 2020.

3 Effective Date. This act shall take effect July 1, 2020.

LBAO

20-3001

12/18/19

SB 662-FN- FISCAL NOTE

AS INTRODUCED

AN ACT relative to an exemption from interest and dividends taxes for medical expenses.

FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None

Estimated Increase / (Decrease)

STATE:

FY 2020

FY 2021

FY 2022

FY 2023

Appropriation

$0

$0

$0

$0

Revenue

$0

Indeterminable Decrease

Indeterminable Decrease

Indeterminable Decrease

Expenditures

$0

$0

$0

$0

Funding Source:

[ X ] General [ ] Education [ ] Highway [ ] Other

METHODOLOGY:

This bill allows for an exemption from the Interest and Dividends (I&D) Tax for medical expenses for taxable periods ending on or after December 31, 2020. The Department of Revenue Administration states this exemption would result in an indeterminable decrease in General Fund revenue in FY 2021 and each year thereafter. The Department does not know the number of taxpayers that would be impacted by this bill or the potential exemption amounts to determine the actual decrease in General Fund revenue. For reference purposes, the Department is able to apply the language of this bill to tax year 2017 to provide an estimate of the impact. The total I&D Tax liability reported by taxpayers who claimed a medical expense exemption on their federal return for tax year 2017 was $59,299,793. To calculate the estimated fiscal impact of this bill on tax year 2017, the Department, for each taxpayer, subtracted the medical expense exemption as reported on the taxpayer's federal return from the taxpayer's adjusted taxable income, and then multiplied this number by the 5 percent I&D Tax to calculate the I&D liability. Adding the medical expense exemption resulted in a tax year 2017 total I&D Tax liability of $55,366,249, which is a decrease in revenue of $3,933,544.

There are some taxpayers who have overpaid their tax liability and carry the overpayment as a credit rather than request a refund. If a taxpayer no longer has an I&D Tax liability due to the changes in this bill, they may request that the credit be refunded, which would add to any revenue decrease associated with this bill.

AGENCIES CONTACTED:

Department of Revenue Administration