LRBs0052/1
MES:lmk&jld:rs
2005 - 2006 LEGISLATURE
SENATE SUBSTITUTE AMENDMENT 1,
TO 2005 SENATE BILL 37
March 23, 2005 - Offered by Senator Leibham.
SB37-SSA1,1,4 1An Act to amend 71.05 (6) (b) 20. (intro.) and 71.07 (5) (a) 15.; and to create
271.05 (6) (b) 35., 71.05 (6) (b) 36., 71.05 (6) (b) 37. and 71.05 (6) (b) 38. of the
3statutes; relating to: creating an individual income tax subtract modification
4for amounts spent on medical insurance premiums by certain individuals.
Analysis by the Legislative Reference Bureau
Under current law, there is an individual income tax deduction for 50 percent
of the amount paid by a person for a medical care insurance policy that covers the
person, his or her spouse, and the person's dependents if the person's employer pays
no amount of money toward the person's medical care insurance. Under this
substitute amendment, the deduction for such persons is increased to 100 percent,
starting in taxable year 2005.
This substitute amendment also creates an individual income tax deduction,
that is phased in over three years, for 33.4 percent in 2006, 66.7 percent in 2007, and
100 percent in 2008 and thereafter, of the amount paid by an individual for a medical
care insurance policy that covers the individual, his or her spouse, and the

individual's dependents if the individual, other than a self-employed person, has no
employer.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB37-SSA1, s. 1 1Section 1. 71.05 (6) (b) 20. (intro.) of the statutes is amended to read:
SB37-SSA1,2,62 71.05 (6) (b) 20. (intro.) For taxable years beginning on or after January 1,
31995, and before January 1, 2005, an amount paid by a person who is the employee
4of another person if the person's employer pays no amount of money toward the
5person's medical care insurance, for medical care insurance for the person, his or her
6spouse and the person's dependents, calculated as follows:
SB37-SSA1, s. 2 7Section 2. 71.05 (6) (b) 35. of the statutes is created to read:
SB37-SSA1,2,128 71.05 (6) (b) 35. For taxable years beginning after December 31, 2004, an
9amount paid by an individual who is the employee of another person if the
10individual's employer pays no amount of money toward the individual's medical care
11insurance, for medical care insurance for the individual, his or her spouse, and the
12individual's dependents, calculated as follows:
SB37-SSA1,2,2113 a. One hundred percent of the amount paid by the individual for medical care
14insurance. In this subdivision, "medical care insurance" means a medical care
15insurance policy that covers the individual, his or her spouse, and the individual's
16dependents and provides surgical, medical, hospital, major medical, or other health
17service coverage, and includes payments made for medical care benefits under a
18self-insured plan, but "medical care insurance" does not include hospital indemnity
19policies or policies with ancillary benefits such as accident benefits or benefits for loss
20of income resulting from a total or partial inability to work because of illness,
21sickness, or injury.
SB37-SSA1,3,3
1b. From the amount calculated under subd. 35. a., subtract the amounts
2deducted from gross income for medical care insurance in the calculation of federal
3adjusted gross income.
SB37-SSA1,3,154 c. For an individual who is a nonresident or part-year resident of this state,
5multiply the amount calculated under subd. 35. a. or b., by a fraction the numerator
6of which is the individual's wages, salary, tips, unearned income, and net earnings
7from a trade or business that are taxable by this state and the denominator of which
8is the individual's total wages, salary, tips, unearned income, and net earnings from
9a trade or business. In this subd. 35. c., for married persons filing separately "wages,
10salary, tips, unearned income, and net earnings from a trade or business" means the
11separate wages, salary, tips, unearned income, and net earnings from a trade or
12business of each spouse, and for married persons filing jointly "wages, salary, tips,
13unearned income, and net earnings from a trade or business" means the total wages,
14salary, tips, unearned income, and net earnings from a trade or business of both
15spouses.
SB37-SSA1,3,1816 d. Reduce the amount calculated under subd. 35. a., b., or c. to the individual's
17aggregate wages, salary, tips, unearned income, and net earnings from a trade or
18business that are taxable by this state.
SB37-SSA1, s. 3 19Section 3. 71.05 (6) (b) 36. of the statutes is created to read:
SB37-SSA1,3,2320 71.05 (6) (b) 36. For taxable years beginning after December 31, 2005, and
21before January 1, 2007, an amount paid by an individual, other than a person to
22whom subd. 19. applies, who has no employer, for medical care insurance for the
23individual, his or her spouse, and the individual's dependents, calculated as follows:
SB37-SSA1,4,724 a. Thirty-three and four-tenths percent of the amount paid by the individual
25for medical care insurance. In this subdivision, "medical care insurance" means a

1medical care insurance policy that covers the individual, his or her spouse, and the
2individual's dependents and provides surgical, medical, hospital, major medical, or
3other health service coverage, and includes payments made for medical care benefits
4under a self-insured plan, but "medical care insurance" does not include hospital
5indemnity policies or policies with ancillary benefits such as accident benefits or
6benefits for loss of income resulting from a total or partial inability to work because
7of illness, sickness, or injury.
SB37-SSA1,4,108 b. From the amount calculated under subd. 36. a., subtract the amounts
9deducted from gross income for medical care insurance in the calculation of federal
10adjusted gross income.
SB37-SSA1,4,2211 c. For an individual who is a nonresident or part-year resident of this state,
12multiply the amount calculated under subd. 36. a. or b., by a fraction the numerator
13of which is the individual's wages, salary, tips, unearned income, and net earnings
14from a trade or business that are taxable by this state and the denominator of which
15is the individual's total wages, salary, tips, unearned income, and net earnings from
16a trade or business. In this subd. 36. c., for married persons filing separately "wages,
17salary, tips, unearned income, and net earnings from a trade or business" means the
18separate wages, salary, tips, unearned income, and net earnings from a trade or
19business of each spouse, and for married persons filing jointly "wages, salary, tips,
20unearned income, and net earnings from a trade or business" means the total wages,
21salary, tips, unearned income, and net earnings from a trade or business of both
22spouses.
SB37-SSA1,4,2523 d. Reduce the amount calculated under subd. 36. a., b., or c. to the individual's
24aggregate wages, salary, tips, unearned income, and net earnings from a trade or
25business that are taxable by this state.
SB37-SSA1, s. 4
1Section 4. 71.05 (6) (b) 37. of the statutes is created to read:
SB37-SSA1,5,52 71.05 (6) (b) 37. For taxable years beginning after December 31, 2006, and
3before January 1, 2008, an amount paid by an individual, other than a person to
4whom subd. 19. applies, who has no employer, for medical care insurance for the
5individual, his or her spouse, and the individual's dependents, calculated as follows:
SB37-SSA1,5,146 a. Sixty-six and seven-tenths percent of the amount paid by the individual for
7medical care insurance. In this subdivision, "medical care insurance" means a
8medical care insurance policy that covers the individual, his or her spouse, and the
9individual's dependents and provides surgical, medical, hospital, major medical, or
10other health service coverage, and includes payments made for medical care benefits
11under a self-insured plan, but "medical care insurance" does not include hospital
12indemnity policies or policies with ancillary benefits such as accident benefits or
13benefits for loss of income resulting from a total or partial inability to work because
14of illness, sickness, or injury.
SB37-SSA1,5,1715 b. From the amount calculated under subd. 37. a., subtract the amounts
16deducted from gross income for medical care insurance in the calculation of federal
17adjusted gross income.
SB37-SSA1,6,418 c. For an individual who is a nonresident or part-year resident of this state,
19multiply the amount calculated under subd. 37. a. or b., by a fraction the numerator
20of which is the individual's wages, salary, tips, unearned income, and net earnings
21from a trade or business that are taxable by this state and the denominator of which
22is the individual's total wages, salary, tips, unearned income, and net earnings from
23a trade or business. In this subd. 37. c., for married persons filing separately "wages,
24salary, tips, unearned income, and net earnings from a trade or business" means the
25separate wages, salary, tips, unearned income, and net earnings from a trade or

1business of each spouse, and for married persons filing jointly "wages, salary, tips,
2unearned income, and net earnings from a trade or business" means the total wages,
3salary, tips, unearned income, and net earnings from a trade or business of both
4spouses.
SB37-SSA1,6,75 d. Reduce the amount calculated under subd. 37. a., b., or c. to the individual's
6aggregate wages, salary, tips, unearned income, and net earnings from a trade or
7business that are taxable by this state.
SB37-SSA1, s. 5 8Section 5. 71.05 (6) (b) 38. of the statutes is created to read:
SB37-SSA1,6,129 71.05 (6) (b) 38. For taxable years beginning after December 31, 2007, an
10amount paid by an individual, other than a person to whom subd. 19. applies, who
11has no employer, for medical care insurance for the individual, his or her spouse, and
12the individual's dependents, calculated as follows:
SB37-SSA1,6,2113 a. One hundred percent of the amount paid by the individual for medical care
14insurance. In this subdivision, "medical care insurance" means a medical care
15insurance policy that covers the individual, his or her spouse, and the individual's
16dependents and provides surgical, medical, hospital, major medical, or other health
17service coverage, and includes payments made for medical care benefits under a
18self-insured plan, but "medical care insurance" does not include hospital indemnity
19policies or policies with ancillary benefits such as accident benefits or benefits for loss
20of income resulting from a total or partial inability to work because of illness,
21sickness, or injury.
SB37-SSA1,6,2422 b. From the amount calculated under subd. 38. a., subtract the amounts
23deducted from gross income for medical care insurance in the calculation of federal
24adjusted gross income.
SB37-SSA1,7,12
1c. For an individual who is a nonresident or part-year resident of this state,
2multiply the amount calculated under subd. 38. a. or b., by a fraction the numerator
3of which is the individual's wages, salary, tips, unearned income, and net earnings
4from a trade or business that are taxable by this state and the denominator of which
5is the individual's total wages, salary, tips, unearned income, and net earnings from
6a trade or business. In this subd. 38. c., for married persons filing separately "wages,
7salary, tips, unearned income, and net earnings from a trade or business" means the
8separate wages, salary, tips, unearned income, and net earnings from a trade or
9business of each spouse, and for married persons filing jointly "wages, salary, tips,
10unearned income, and net earnings from a trade or business" means the total wages,
11salary, tips, unearned income, and net earnings from a trade or business of both
12spouses.
SB37-SSA1,7,1513 d. Reduce the amount calculated under subd. 38. a., b., or c. to the individual's
14aggregate wages, salary, tips, unearned income, and net earnings from a trade or
15business that are taxable by this state.
SB37-SSA1, s. 6 16Section 6. 71.07 (5) (a) 15. of the statutes is amended to read:
SB37-SSA1,7,2217 71.07 (5) (a) 15. The amount claimed as a deduction for medical care insurance
18under section 213 of the Internal Revenue Code that is exempt from taxation under
19s. 71.05 (6) (b) 17. to 20., 35., 36., 37., and 38. and the amount claimed as a deduction
20for a long-term care insurance policy under section 213 (d) (1) (D) of the Internal
21Revenue Code, as defined in section 7702B (b) of the Internal Revenue Code that is
22exempt from taxation under s. 71.05 (6) (b) 26.
SB37-SSA1, s. 7 23Section 7. Initial applicability.
SB37-SSA1,8,2
1(1) The treatment of section 71.07 (5) (a) 15. of the statutes first applies to
2taxable years beginning on January 1, 2005.
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