What is the Purchase of Long-Term Care Insurance Credit?

Individuals may claim a credit equal to 15% of the amount paid by the individual during the taxable year in eligible long-term care insurance premiums for long-term care insurance coverage for himself, but the total credits for any policy may not exceed 15% of the amount of premiums paid for the first 12 months of coverage. Any unused credit may be carried forward for the next five taxable years. In order to determine the amount of eligible premiums that may be used as a basis for this credit, the individual must subtract any amount actually included as a deduction on Line 4 of Schedule A of the individual's federal income tax return. In addition, the individual may not claim this credit to the extent the same premiums have been used to claim the Virginia deduction for long-term health care premiums. It may be possible, however, for an individual to claim this credit and the Virginia deduction in the same year. Please see the example below.

This credit is based on the amount paid during the taxable year, even if the months covered by the policy extend into the following taxable year. For example, if an individual purchased a policy on July 1 and paid for 12 months, he would base his credit on the entire payment, even though only six months of the coverage period would fall in the taxable year in which he claimed the credit. If however, the individual made payments on a monthly basis, he would claim a credit in the current taxable year for 6 months of premiums and a credit in the second year for the next six months of premiums in order to reach the allowed total of 12 months. In that case, the individual could also claim a deduction in the second year for the 6 months of premiums that were not used as a basis for the credit.

For more information, contact:

Virginia Department of Taxation
Tax Credit Unit
P.O. Box 715
Richmond, VA 23218-0715

or call 804-786-2992.

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