Illinois lawmakers approve tax deductions for health insurance and Holocaust survivor compensation

On March 13, 2025, the Illinois House of Representatives introduced House Bill 3310, a legislative proposal aimed at providing tax relief for self-employed individuals and certain business owners. The bill seeks to address the financial burdens associated with health insurance and long-term care insurance premiums, which have become increasingly significant for many taxpayers in the state.

The primary provision of House Bill 3310 allows self-employed taxpayers, partners in partnerships, and shareholders in Subchapter S corporations to deduct health insurance and long-term care insurance premiums from their taxable income. This deduction is contingent upon the premiums not being claimed on their federal income tax returns and not exceeding the taxpayer's income. Notably, the bill stipulates that no deduction will be permitted if the taxpayer or their spouse has access to an employer-sponsored health insurance plan.

Supporters of the bill argue that it will alleviate some of the financial strain on small business owners and self-employed individuals, who often face higher health care costs without the benefits of employer-sponsored plans. They contend that this measure could encourage entrepreneurship and support the local economy by allowing individuals to retain more of their earnings.

However, the bill has sparked debates among lawmakers. Critics express concerns about the potential loss of state revenue and the fairness of providing tax breaks to self-employed individuals while other taxpayers may not receive similar benefits. Amendments to the bill are expected as discussions continue, with some legislators advocating for a more comprehensive approach to health care affordability.

The implications of House Bill 3310 extend beyond tax relief; they touch on broader economic and social issues, including access to health care and the sustainability of small businesses in Illinois. Experts suggest that if passed, the bill could lead to increased financial stability for many self-employed individuals, potentially resulting in a more vibrant local economy.

As the legislative process unfolds, the future of House Bill 3310 remains uncertain. Lawmakers will need to balance the needs of taxpayers with the fiscal responsibilities of the state, making this a critical issue for both the business community and the broader public. The outcome of this bill could set a precedent for how Illinois addresses health care costs and tax policy in the years to come.