To amend the Internal Revenue Code of 1986 to allow an above-the-line deduction for health insurance premiums.
- Bill Number
- H.R. 111
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-01-03: Referred to the House Committee on Ways and Means.
- Last Updated
- 2025-02-14T19:31:17Z
AI-Generated Summary
Purpose
This bill (H.R. 111) aims to provide tax relief by allowing individuals to deduct health insurance premiums directly from their gross income, regardless of whether they itemize other deductions on their tax return. This "above-the-line" deduction simplifies access to the benefit and encourages maintaining health coverage.
Key Provisions
- New Deduction: Adds Section 224 to the Internal Revenue Code (IRC), permitting taxpayers to deduct amounts paid for health insurance premiums that qualify as "medical care" (as defined in IRC Section 213(d), which includes coverage for preventing, diagnosing, or treating illness or injury).
- Eligibility: The deduction applies to premiums for the taxpayer, their spouse, and dependents.
- Above-the-Line Status: Amends IRC Section 62 to make this deduction available even for those taking the standard deduction, without needing to itemize expenses.
- Limitations: The deducted amount cannot be used to calculate other tax deductions or credits under the IRC.
- Effective Date: Applies to tax years starting after December 31, 2024.
Significant Changes to Existing Law
- Under current law, health insurance premiums are generally deductible only if the taxpayer itemizes deductions (Schedule A) and meets specific criteria, such as being self-employed. This bill expands access by making it an above-the-line deduction (adjusted gross income adjustment), available to all individual taxpayers without itemizing.
- It renumbers existing IRC Section 224 to 225 and updates the table of contents for clarity.
Potential Impacts
- On Citizens: Lowers taxable income for individuals paying health insurance premiums, potentially reducing their overall tax bill and making coverage more affordable. This could benefit middle- and lower-income families who do not itemize deductions.
- On Government Agencies: The Internal Revenue Service (IRS) will need to administer the new deduction, possibly requiring updates to tax forms and software. It may lead to reduced federal tax revenue due to increased deductions claimed.
- On International Relations: No direct impact, as this is a domestic tax policy change.
Main Stakeholders Affected
- Individual Taxpayers: Primary beneficiaries, especially those with family health coverage who previously could not deduct premiums easily.
- Health Insurance Providers: Indirectly affected, as the deduction may increase demand for private health insurance by reducing its after-tax cost.
- IRS and Treasury Department: Responsible for implementation, enforcement, and revenue collection adjustments.
- Self-Employed Individuals: Gain expanded relief, building on existing self-employed health insurance deductions.
Notable Legal, Constitutional, or Political Implications
- Legal: Aligns with the IRC's structure for income adjustments, avoiding conflicts with existing medical expense rules. It promotes tax equity by broadening access without altering definitions of medical care.
- Constitutional: No apparent challenges, as it falls under Congress's authority to levy and regulate taxes (Article I, Section 8).
- Political: Represents a tax simplification and relief measure, potentially appealing across party lines by supporting health coverage without mandating it. Could influence broader debates on healthcare affordability and tax code reforms, though it may face scrutiny over revenue costs in budget discussions.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2025-01-03: Referred to the House Committee on Ways and Means.
- 2025-01-03: Introduced in House
- 2025-01-03: Introduced in House
Bill Versions
- To amend the Internal Revenue Code of 1986 to allow an above-the-line deduction for health insurance premiums. — issued 2025-01-03 — PDF (3 pages)