AN ACT ESTABLISHING A PERSONAL INCOME TAX DEDUCTION FOR CERTAIN PAYMENTS RECEIVED FROM AN INSURANCE COMPANY.

Plain English Breakdown

The official source material does not provide specific details about the amount of payment that qualifies for the deduction or any limitations on claiming it.

Tax Break for Insurance Payments

This act creates a personal income tax deduction for the portion of payments from an insurance company received by taxpayers when they cancel or buy out long-term care insurance policies, and that must be included in federal income taxes.

What This Bill Does

• Creates a new personal income tax deduction for certain payments from an insurance company related to the cancellation or buyout of long-term care insurance policies.
• Limits this deduction to payments that are properly includable in gross income for federal income tax purposes.

Who It Names or Affects

• Taxpayers who receive payments from insurance companies for cancelling or buying out long-term care policies.
• Insurance companies providing such payments.

Terms To Know

Long-term care insurance

A type of insurance that helps pay for the cost of caring for someone over a long period, often due to illness or disability.

Personal income tax deduction

An amount subtracted from taxable income which can lower the total taxes owed by an individual.

Limits and Unknowns

• The bill does not specify how much of a payment qualifies for this deduction.
• It is unclear if there are any limits on when or how often taxpayers can claim this deduction.

Official Summary Text

To establish a personal income tax deduction for the portion of any payment from an insurance company received by a taxpayer (1) in exchange for a buyout or cancellation of a long-term care insurance policy, and (2) that is properly includable in gross income for federal income tax purposes.

Current Bill Text

LCO No. 135 1 of 1

General Assembly Proposed Bill No. 5018
February Session, 2026 LCO No. 135

Referred to Committee on FINANCE, REVENUE AND
BONDING

Introduced by:
REP. TURCO, 27th Dist.
REP. DEMICCO, 21st Dist.

AN ACT ESTABLISHING A PERSONAL INCOME TAX DEDUCTION
FOR CERTAIN PAYMENTS RECEIVED FROM AN INSURANCE
COMPANY.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:

That section 12-701 of the general statutes be amended to establish a 1
personal income tax deduction for the portion of any payment from an 2
insurance company received by a taxpayer (1) in exchange for a buyout 3
or cancellation of a long -term care insurance policy, and (2) that is 4
properly includable in gross income for federal income tax purposes. 5
Statement of Purpose:
To establish a personal income tax deduction for the portion of any
payment from an insurance company received by a taxpayer (1) in
exchange for a buyout or cancellation of a long -term care insurance
policy, and (2) that is properly includable in gross income for federal
income tax purposes.