Bill
HB 2604
HB 2604 would create an Illinois deduction for out-of-pocket long-term care costs for self or a family member, reducing taxable income but lowering state revenue; details TBD.
Status & Procedural History
- Bill: HB 2604 (Illinois) — titled in bill text as an amendment to the Illinois Income Tax Act (35 ILCS 5/203).
- Primary sponsor: Rep. Adam M. Niemerg.
- Filed: February 6–10, 2025. Passed the Illinois House (2/26/2025); transmitted to the Senate and proceeded through first and second readings there. Assigned to Revenue & Finance Committee and referred to the Tax Policy: Income Tax Subcommittee; later readied for Appropriations. On 2025-03-21 it was returned under Rule 19(a) and re‑referred to the Rules Committee.
- Companion: SB 45.
Purpose / Intent
- To create a state income tax deduction for out‑of‑pocket long‑term care (LTC) expenses incurred by taxpayers during the taxable year for themselves or for a family member. The aim is to reduce the tax burden on individuals who pay LTC costs directly.
Key Provisions
- Amends Section 203 (base income definition) of the Illinois Income Tax Act.
- Establishes an income tax deduction equal to the out‑of‑pocket costs a taxpayer incurs in the taxable year for expenses associated with long‑term care for the taxpayer or the taxpayer’s family member.
- Effective date: the bill text states “Effective immediately.”
What the Bill Would Change / How It Works
- If enacted, taxpayers would be able to reduce their Illinois taxable base by the amount of qualifying LTC expenses they paid out‑of‑pocket during the year (i.e., the deduction lowers base income used to calculate Illinois tax).
- The bill text provided is brief in the synopsis and does not include detailed definitions or limits in the excerpt shown (for example: what counts as qualifying LTC expenses; whether there is a dollar cap, phase‑out by income, or documentation requirement; interaction with federal medical expense deductions; or whether expenses paid via Medicaid, insurance reimbursements, HSAs, or FSA accounts are excluded). Those details typically determine the scope and cost of the deduction.
Who Would Be Affected
- Primary beneficiaries: individual taxpayers in Illinois who pay out‑of‑pocket for long‑term care services — either for themselves or for family members (such as elderly parents).
- Secondary effects: providers of LTC services (potentially modest increased demand if after‑tax costs fall) and state fiscal authorities (reduced income tax receipts).
- Tax administration: Illinois Department of Revenue would need to implement guidance and verification processes if the bill passes.
Potential Fiscal & Policy Impacts
- State revenue: the deduction would reduce base income and therefore lower income tax revenue. The magnitude depends on (a) how many taxpayers claim it, (b) whether the deduction is capped or limited, and (c) average qualifying expenses. No fiscal estimate is included in the excerpt; an official revenue impact estimate would be produced by legislative fiscal staff or the Department of Revenue.
- Equity: benefits those paying LTC costs out‑of‑pocket; taxpayers who receive LTC covered by Medicaid or who lack sufficient taxable income to benefit from a deduction would gain less or nothing.
- Administrative considerations: defining qualifying expenses, documentation and substantiation rules, and coordination with federal deductions and insurance reimbursements will be necessary for implementation.
Open / Missing Details to Watch
- The full bill text (beyond the synopsis excerpt) or subsequent amendments may define qualifying LTC services, impose dollar caps or income phase‑outs, require receipts/affidavits, or limit interaction with other tax benefits.
- Official fiscal notes and committee reports (Revenue & Finance; Appropriations) will be important to assess state budget impact.
Bottom line
HB 2604 would add a new Illinois state income tax deduction allowing taxpayers to subtract out‑of‑pocket long‑term care expenses for themselves or family members from taxable income, lowering their state tax liability. The policy reduces after‑tax LTC costs for qualifying taxpayers but will reduce state revenue; the bill’s final impact depends on implementation details (caps, definitions, substantiation) that are not included in the summarized excerpt.
Compiled from official sources — confirm details with the bill’s official record.
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