Sec. 1. 36 MRSA §5219-U is enacted to read:

§5219-U.__Health insurance premium tax credit

1.__Credit allowed.__A taxpayer who does not constitute an employing unit is allowed a credit against the tax imposed by this Part for each taxable year equal to 50% of the amount of the health insurance premium paid by the taxpayer.

2.__Qualifications.__A taxpayer is eligible for a credit under this section if:

A.__The taxpayer pays the full premium for health insurance coverage; or

B.__The taxpayer pays a portion of the health insurance premium under a health insurance program offered by the taxpayer's employer.

3.__Limitations.__The amount of the credit allowed under this section may not exceed $4,000 in any tax year and may not exceed the amount of tax otherwise due under this Part.__This credit may not reduce the state income tax to less than zero.__Any unused credit may not be carried over to the following year.

4.__Application.__This section applies to health insurance premiums paid in any tax year beginning on or after January 1, 2002.

SUMMARY

This bill establishes a state income tax credit for up to 50% of the health insurance premiums paid by individuals. The credit is available to individuals who pay the full premium for health insurance and also to individuals who pay a portion of the premium under a health insurance program offered through their employer. The credit applies to premiums paid in any tax year beginning on or after January 1, 2002.