The bill is poised to alleviate some financial pressure on individuals and families who incur substantial medical expenses. With the growing trend of healthcare costs expected to rise nearly ten percent annually, this tax deduction could provide necessary relief. It's particularly significant as it is anticipated that many Coloradans may lose Medicaid coverage, leading to higher out-of-pocket medical expenses due to reduced access to subsidized healthcare. The ability to claim these expenses as deductions may help mitigate some of these financial challenges.
Summary
House Bill 1163 seeks to establish a state income tax deduction for out-of-pocket medical expenses incurred by taxpayers in Colorado. Specifically, for income tax years starting from January 1, 2023, and continuing through December 31, 2029, taxpayers will be allowed to claim a deduction for qualifying medical expenses. These expenses must not be claimed on the taxpayer's federal income tax return nor reimbursed through a medical savings account or insurance. This act aims to address the increasing financial burden associated with out-of-pocket healthcare costs.
Contention
Notably, the bill aims to serve a clear purpose by providing tax relief to taxpayers with qualifying medical expenses. However, there might be concerns regarding the bill's effectiveness and the potential administrative burden it could impose on the tax system. The fiscal implications, especially regarding the state budget and overall economic impact, are points that might spark debate amongst lawmakers and stakeholders. Additionally, the effectiveness of the deduction in easing financial burdens will be monitored by the general assembly and state auditor based on its uptake by the taxpayer population.