On March 6, 2019

Tax deduction on health expenses may be restored

By Anne Wallace Allen/VTDigger

Lawmakers in the House Ways and Means Committee are looking at restoring a deduction on health expenses that was removed from the tax code last year.

A proposal sponsored by Rep. Kate Webb, D-Shelburne, would restore the deduction, with the full amount that is deductible at the federal level allowed as a deduction at the state level.

Advocates for the chronically ill and the elderly told the committee Tuesday that restoring the deduction would help about 7,300 people who had seen their taxes increase dramatically this year, for many of them unexpectedly.

The bill, H.199, calls for the deduction to be restored retroactive to last year.

The cost to the state of making the change this year would be about $5.2 million, according to the Legislature’s Joint Fiscal Office (JFO), said Webb.

Webb said many people assume that last year’s tax change only affected the wealthy. But that’s not true, she said.

“This may be an assumption based on bias,” said Webb.  Webb said only 190 taxpayers who have income of more than $300,000 annually would be affected by the change. Among those earning less than $125,000 a year, about 4,000 taxpayers would be affected, Webb said.

Before 2018, when taxpayers could deduct medical expenses that were more than 7.5 percent of their adjusted gross income, that deduction applied to the Vermont return as well. But last year that changed. Vermonters still receive the deduction at the federal level.

Accountant Judy Hettena Wright estimated that the change will cost her about $3,000 in additional taxes every year. Wright has a genetic disorder called Ehlers Danlos, or EDS, that she said costs her $50,000 out of pocket each year.

“Unless the law is changed, this will be a permanent increase for me,” she told the committee. “As a result, I have already had to start reducing my non-insured medical care visits that help my body function and provide pain relief.”

Wright said her clients in assisted living are liable for about $4,000 more in taxes than last year.

“The thing I hope to get across today is the unintended consequences on this vulnerable population,” she said. “And it’s not a one-year increase; it’s a permanent increase that has to be taken into account on top of the medical expense budget.”

When asked by a member of House Ways and Means, Graham Campbell, an analyst at the JFO, said many states have a deduction for out-of-pocket health expenses similar to the one Vermont removed last year.

Advocates believe House Ways and Means removed the deduction without consulting the information they needed to make a sound decision, Shelburne resident Bob Ulrich told the panel.

“Despite our extensive reading of (Joint Fiscal Office) reports, and contacts with legislators, we continued to be bothered by the lack of evidence that the committees studied in any depth the impact of the removal of medical deductions on vulnerable populations,” said Ulrich.

Gov. Phil Scott said, “This was an area that I believe was maybe overlooked…we’ve heard a lot of concerns there, and I believe they are founded. We want there to be fairness across the board.”

Do you want to submit feedback to the editor?

Send Us An Email!

Related Posts

Large turnout for Hartland school budget info session

May 23, 2024
By Curt Peterson The May 21 Hartland school budget information session may be the best-attended school board gathering in recent history — an estimated 40 people attended in person at Damon Hall in Hartland, and another 41 tuned in online. Hartland voters had already approved the $11,040,567 budget 320-311 on April 2. But a petition…

United Way of Rutland County names new exc. director

May 22, 2024
The United Way of Rutland County (UWRC) announced the appointment of Tina Van Guilder as its new executive director, May 17.  Van Guilder officially assumed her role as executive director May 6. With over seven years of direct non-profit leadership experience in the Rutland County area, coupled with recent roles focusing on grant coordination, budget…

Slate Valley school district to hold fourth vote on district budget

May 22, 2024
In response to the results of the last vote on May 9, and valuable community feedback during the school board meeting on May 13, the Slate Valley Unified Union School District will hold its fourth vote in an attempt to pass the budget on May 30. It will be a revote on the third FY25…

Where is the road construction this week? 

May 22, 2024
The Agency of Transportation produces this weekly report of planned construction activities that will impact traffic on state highways and interstates throughout Vermont. Hartford: Monday, May 20, through Friday, May 24, between 8 a.m. and 5 p.m., multiple concrete mixers will be moving in and out of the project area at either end of the…