Amendment SSA1-SB37

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 An Act to amend 71.05 (6) (b) 20. (intro.) and 71.07 (5) (a) 15.; and to create 71.05 (6) (b) 35., 71.05 (6) (b) 36., 71.05 (6) (b) 37. and 71.05 (6) (b) 38. of the statutes; relating to: creating an individual income tax subtract modification for 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 Section 1. 71.05 (6) (b) 20. (intro.) of the statutes is amended to read:

SB37-SSA1,2,6 71.05 (6) (b) 20. (intro.) For taxable years beginning on or after January 1, 1995, and before January 1, 2005, an amount paid by a person who is the employee of another person if the person's employer pays no amount of money toward the person's medical care insurance, for medical care insurance for the person, his or her spouse and the person's dependents, calculated as follows:

SB37-SSA1, s. 2 Section 2. 71.05 (6) (b) 35. of the statutes is created to read:

SB37-SSA1,2,12 71.05 (6) (b) 35. For taxable years beginning after December 31, 2004, an amount paid by an individual who is the employee of another person if the individual's employer pays no amount of money toward the individual's medical care insurance, for medical care insurance for the individual, his or her spouse, and the individual's dependents, calculated as follows:

SB37-SSA1,2,21 a. One hundred percent of the amount paid by the individual for medical care insurance. In this subdivision, "medical care insurance" means a medical care insurance policy that covers the individual, his or her spouse, and the individual's dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but "medical care insurance" does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury.

SB37-SSA1,3,3 b. From the amount calculated under subd. 35. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income.

SB37-SSA1,3,15 c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 35. a. or b., by a fraction the numerator of which is the individual's wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual's total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 35. c., for married persons filing separately "wages, salary, tips, unearned income, and net earnings from a trade or business" means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly "wages, salary, tips, unearned income, and net earnings from a trade or business" means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses.

SB37-SSA1,3,18 d. Reduce the amount calculated under subd. 35. a., b., or c. to the individual's aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state.

SB37-SSA1, s. 3 Section 3. 71.05 (6) (b) 36. of the statutes is created to read:

SB37-SSA1,3,23 71.05 (6) (b) 36. For taxable years beginning after December 31, 2005, and before January 1, 2007, an amount paid by an individual, other than a person to whom subd. 19. applies, who has no employer, for medical care insurance for the individual, his or her spouse, and the individual's dependents, calculated as follows:

SB37-SSA1,4,7 a. Thirty-three and four-tenths percent of the amount paid by the individual for medical care insurance. In this subdivision, "medical care insurance" means a medical care insurance policy that covers the individual, his or her spouse, and the individual's dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but "medical care insurance" does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury.

SB37-SSA1,4,10 b. From the amount calculated under subd. 36. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income.

SB37-SSA1,4,22 c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 36. a. or b., by a fraction the numerator of which is the individual's wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual's total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 36. c., for married persons filing separately "wages, salary, tips, unearned income, and net earnings from a trade or business" means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly "wages, salary, tips, unearned income, and net earnings from a trade or business" means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses.

SB37-SSA1,4,25 d. Reduce the amount calculated under subd. 36. a., b., or c. to the individual's aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state.

SB37-SSA1, s. 4 Section 4. 71.05 (6) (b) 37. of the statutes is created to read:

SB37-SSA1,5,5 71.05 (6) (b) 37. For taxable years beginning after December 31, 2006, and before January 1, 2008, an amount paid by an individual, other than a person to whom subd. 19. applies, who has no employer, for medical care insurance for the individual, his or her spouse, and the individual's dependents, calculated as follows:

SB37-SSA1,5,14 a. Sixty-six and seven-tenths percent of the amount paid by the individual for medical care insurance. In this subdivision, "medical care insurance" means a medical care insurance policy that covers the individual, his or her spouse, and the individual's dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but "medical care insurance" does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury.

SB37-SSA1,5,17 b. From the amount calculated under subd. 37. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income.

SB37-SSA1,6,4 c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 37. a. or b., by a fraction the numerator of which is the individual's wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual's total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 37. c., for married persons filing separately "wages, salary, tips, unearned income, and net earnings from a trade or business" means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly "wages, salary, tips, unearned income, and net earnings from a trade or business" means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses.

SB37-SSA1,6,7 d. Reduce the amount calculated under subd. 37. a., b., or c. to the individual's aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state.

SB37-SSA1, s. 5 Section 5. 71.05 (6) (b) 38. of the statutes is created to read:

SB37-SSA1,6,12 71.05 (6) (b) 38. For taxable years beginning after December 31, 2007, an amount paid by an individual, other than a person to whom subd. 19. applies, who has no employer, for medical care insurance for the individual, his or her spouse, and the individual's dependents, calculated as follows:

SB37-SSA1,6,21 a. One hundred percent of the amount paid by the individual for medical care insurance. In this subdivision, "medical care insurance" means a medical care insurance policy that covers the individual, his or her spouse, and the individual's dependents and provides surgical, medical, hospital, major medical, or other health service coverage, and includes payments made for medical care benefits under a self-insured plan, but "medical care insurance" does not include hospital indemnity policies or policies with ancillary benefits such as accident benefits or benefits for loss of income resulting from a total or partial inability to work because of illness, sickness, or injury.

SB37-SSA1,6,24 b. From the amount calculated under subd. 38. a., subtract the amounts deducted from gross income for medical care insurance in the calculation of federal adjusted gross income.

SB37-SSA1,7,12 c. For an individual who is a nonresident or part-year resident of this state, multiply the amount calculated under subd. 38. a. or b., by a fraction the numerator of which is the individual's wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state and the denominator of which is the individual's total wages, salary, tips, unearned income, and net earnings from a trade or business. In this subd. 38. c., for married persons filing separately "wages, salary, tips, unearned income, and net earnings from a trade or business" means the separate wages, salary, tips, unearned income, and net earnings from a trade or business of each spouse, and for married persons filing jointly "wages, salary, tips, unearned income, and net earnings from a trade or business" means the total wages, salary, tips, unearned income, and net earnings from a trade or business of both spouses.

SB37-SSA1,7,15 d. Reduce the amount calculated under subd. 38. a., b., or c. to the individual's aggregate wages, salary, tips, unearned income, and net earnings from a trade or business that are taxable by this state.

SB37-SSA1, s. 6 Section 6. 71.07 (5) (a) 15. of the statutes is amended to read:

SB37-SSA1,7,22 71.07 (5) (a) 15. The amount claimed as a deduction for medical care insurance under section 213 of the Internal Revenue Code that is exempt from taxation under s. 71.05 (6) (b) 17. to 20., 35., 36., 37., and 38. and the amount claimed as a deduction for a long-term care insurance policy under section 213 (d) (1) (D) of the Internal Revenue Code, as defined in section 7702B (b) of the Internal Revenue Code that is exempt from taxation under s. 71.05 (6) (b) 26.

SB37-SSA1, s. 7 Section 7. Initial applicability.

SB37-SSA1,8,2 (1) The treatment of section 71.07 (5) (a) 15. of the statutes first applies to taxable years beginning on January 1, 2005.

SB37-SSA1,8,3 (End)