Deducting Long-Term Care Premiums on an Iowa Tax Return

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Iowa allows a deduction in full for health insurance premiums paid with after-tax dollars. Taxpayers can take this deduction even if they don’t itemize deductions, and the deduction is allowed in full (it’s not subject to the 7.5%/10% phaseouts like on a federal return).

On a federal tax return, premiums paid for long-term care insurance are deductible as an itemized deduction, but the deduction is subject to certain limits depending on the age of the taxpayer for whom the premiums are paid.

How does this work in Iowa? The answer is taxpayer-friendly: long-term care premiums are deductible in full on the Iowa tax return, NOT subject to the federal limitations.

Source: expanded instructions to the Iowa 1040, Line 18, Step 6. Long-term care premiums are listed under the “100% deductible” column.

As a reminder: insurance premiums of any kind must be paid with AFTER-TAX dollars in order to be deducted on the Iowa return (or the federal return for that matter).