South Carolina General Assembly introduces Long-Term Care Tax Credit Act

On January 21, 2025, South Carolina lawmakers introduced Senate Bill 250, known as the "Long-Term Care Tax Credit Act," aimed at easing the financial burden of long-term care insurance for residents. This proposed legislation seeks to provide individual taxpayers with a 15% income tax credit on premiums paid for qualified long-term care insurance, capped at $2,000 per individual per taxable year.

The bill addresses a pressing issue for many South Carolinians: the rising costs of long-term care. As the population ages, the demand for such services is expected to increase, making it crucial for families to have access to affordable insurance options. By incentivizing the purchase of long-term care insurance, the bill aims to encourage more residents to secure coverage, potentially alleviating future financial strain on both families and the state’s healthcare system.

Key provisions of the bill stipulate that the credit applies only to premiums that have not been deducted from the taxpayer's income, ensuring that individuals do not receive a double benefit. Additionally, nonresidents will have their credits adjusted similarly to personal exemptions, maintaining fairness across the board.

While the bill has garnered support for its potential to enhance financial security for families, it has also sparked debates regarding its fiscal implications. Critics argue that the tax credit could lead to a significant reduction in state revenue, raising concerns about funding for other essential services. Proponents, however, contend that the long-term benefits of encouraging insurance coverage will outweigh initial costs, as it may reduce the need for state-funded healthcare services in the future.

As the bill progresses through the legislative process, its impact on South Carolina's economy and healthcare landscape remains to be seen. If enacted, the Long-Term Care Tax Credit Act could represent a significant step toward addressing the challenges of long-term care financing, ultimately benefiting many residents in the Palmetto State. The bill is set to take effect for taxable years beginning after 2024, pending approval from the Governor.