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Creates a new above-the-line deduction that lets taxpayers subtract health insurance premiums they pay for themselves, their spouse, and their dependents when calculating adjusted gross income. The deduction is added to the Internal Revenue Code and applies to tax years beginning after December 31, 2024. The bill specifies that amounts deducted under this new provision cannot be counted again for any other deduction or credit under the tax code. It updates the tax code table of contents and amends the list of above-the-line deductions to include the new deduction.
The bill makes health insurance premiums deductible above-the-line—broadening tax relief (including to non-itemizers) and potentially improving eligibility for other benefits—while reducing federal revenue and providing limited help to those with little tax liability, with rules preventing double-counting of the same premiums.
Many taxpayers (including non-itemizers) can deduct health insurance premiums above-the-line, lowering their adjusted gross income and reducing taxable income for themselves, spouses, and dependents.
Lowering AGI through the deduction can increase eligibility for other income‑tested tax benefits and credits for some households.
The deduction reduces federal revenue, which could increase the budget deficit or force future spending cuts or tax changes.
Low-income households with little or no tax liability receive limited benefit from a deduction compared with refundable credits, so the relief is uneven and may miss the neediest.
Taxpayers who claim this deduction cannot also use the same premiums to qualify for or increase other deductions or credits, which may offset some of the intended benefit.
Introduced January 3, 2025 by Andrew S. Biggs · Last progress January 3, 2025