Senate Bill S8901

                                 
BILL NUMBER: S8901

SPONSOR: OBERACKER
 
TITLE OF BILL:

An act to amend the tax law, in relation to establishing a tax deduction
for a beneficiary of a deferred compensation plan who uses such distrib-
ution to pay for qualified health insurance premiums

 
PURPOSE:

To establish a new tax deduction for income from a deferred compensation
plan that is directed toward health insurance premium costs for all
beneficiaries.

 
SUMMARY OF PROVISIONS:

Section 1. amends subsection C of section 612 of the Tax Law by adding a
new paragraph 48 to allow a taxpayer who is a beneficiary of a deferred
compensation plan, as authorized under section four-hundred fifty-seven
of the internal revenue code, to elect to make a distribution of such
deferred compensation in and amount equal to six thousand dollars in
              

order to pay for qualified health insurance premiums. Section 2.
provides the effective date.

 
JUSTIFICATION:

The Internal Revenue Code sets forth the Personal Income Tax exclusion
limit of $3,000 for deferred compensation plan disbursements that are
used for health insurance premiums. This benefit is currently only
available for retired public safety officers and was originally enacted
as part of the federal Pension Protection Act of 2006. This limit has
not been adjusted to account inflation or for increased health care
rates. This legislation would establish a similar benefit for all New
York retirees with Deferred Compensation plans on their State Personal
Income Taxes. Eligible retirees in New York would be able to utilize
$6,000 from their Deferred Compensation disbursements to pay for quali-
fied health insurance premiums and deduct that amount from their New
York Adjusted Gross Income. New York State leads the nation in out-mi-
gration as residents flee to more affordable places to live, particular-
ly in retirement. Providing this benefit at the State level would reduce
costs for retirees and could help to incentivize staying in New York.

 
LEGISLATIVE HISTORY:

New bill.

 
STATE AND LOCAL FISCAL IMPLICATIONS:

To be determined.

 
EFFECTIVE DATE:
This act shall take effect immediately and shall apply to all taxable
years beginning on or after January 1, 2024.