Committee hears bill to allow up to $10,000 subtraction for dependent health premiums; advocates cite middle-income squeeze

The Senate Committee on Finance and Revenue held a public hearing April 14 on Senate Bill 1134, which would create a personal income tax subtraction for amounts a taxpayer pays for medical, dental or vision insurance premiums for a qualifying child dependent, limited to $10,000 per child and subject to income limits.

Under the bill as presented, eligibility would be means‑tested: joint filers with adjusted gross income between $90,000 and $150,000 and other filers between $45,000 and $75,000 could claim the subtraction. The sponsor described the proposal as aimed at "that middle income niche" of workers who are ineligible for programs such as the Oregon Health Plan and who pay for dependent coverage out of pocket.

Senator David Brock Smith introduced the measure and said it originated from a constituent who is a single mother and self‑employed massage‑therapy business owner. The constituent, Sarah Miller, testified remotely about the financial strain of family coverage costs: "When insurance for 1 child is quoted more than per se my car payment...it can break a person," she said, and explained she had paid cash for appointments and dental care when insurance costs were unaffordable.

Marcia Kelly of the Oregon Women's Rights Coalition urged caution, telling the committee to review existing federal and state provisions before creating a new tax subtraction. Kelly noted that self‑employed taxpayers currently may claim an above‑the‑line deduction for health insurance premiums and that the premium tax credit under the Affordable Care Act can also affect tax treatment. LRO staff confirmed there are multiple overlapping provisions—including the self‑employed above‑the‑line deduction and marketplace premium tax credits—and recommended a detailed policy review or informational hearing to map interactions.

Committee members asked about a possible cliff effect at the income thresholds and about how the $10,000 cap would apply if actual premiums are lower; staff and the sponsor clarified that the subtraction may not exceed actual premiums paid and that the $10,000 figure is a per‑child cap.

No vote was taken. The committee closed the public hearing and signaled it may request additional information or hold an informational session to examine overlaps with existing deductions and credits.