On February 5, 2025, the Illinois House of Representatives introduced HB2735, a legislative bill aimed at revising tax deductions related to health insurance and long-term care for self-employed individuals and certain business owners. This bill seeks to address the financial burdens faced by taxpayers who are not covered by employer-sponsored health plans, particularly in the context of rising healthcare costs.

The primary provisions of HB2735 include allowing self-employed taxpayers, partners in partnerships, and shareholders in Subchapter S corporations to deduct health and long-term care insurance premiums from their taxable income. This deduction is contingent upon the taxpayer not being eligible for any employer-sponsored health insurance plans. The bill specifies that the deduction cannot exceed the taxpayer's income and is calculated based on the proportion of eligible medical expenses that were not deducted on the federal tax return.

The introduction of HB2735 has sparked notable discussions among lawmakers, particularly regarding its potential impact on state revenue and the healthcare landscape. Proponents argue that the bill will provide much-needed financial relief to self-employed individuals, who often face higher insurance premiums without the benefit of employer contributions. Critics, however, express concerns about the long-term implications for state tax revenues and the fairness of providing additional tax breaks to certain groups over others.

Economically, the bill could encourage more individuals to pursue self-employment by alleviating some of the financial risks associated with healthcare costs. Socially, it aims to improve access to necessary health services for those who may otherwise struggle to afford insurance. Politically, the bill reflects ongoing debates about healthcare reform and the role of government in supporting small business owners and self-employed individuals.

As the legislative process unfolds, stakeholders will be closely monitoring the bill's progress and any amendments that may arise. The outcome of HB2735 could set a precedent for future tax policies aimed at supporting vulnerable populations in the state, making it a significant topic of discussion in Illinois politics.