A BILL TO BE ENTITLED
AN ACT to amend the income tax credit for long‑term care insurance and to create an income tax credit for individuals with long‑term care needs.
The General Assembly of North Carolina enacts:
SECTION 1.  Section 29A.6(d) of S.L. 1998‑212 reads as rewritten:
"Section 29A.6.(d)  Subsection (a) of this section is effective for taxable years beginning on or after January 1, 1999. The remainder of this section is effective when it becomes law. "
SECTION 2.  Part 2 of Article 4 of Chapter 105 of the General Statutes is amended by adding a new section to read:
"§ 105-151.29.  Credit for individuals with long-term care needs.
(a)	Credit. – A taxpayer is allowed, as a credit against the tax imposed by this Part, an amount equal to the applicable credit amount multiplied by the number of applicable individuals with respect to whom the taxpayer is an eligible caregiver for the taxable year. A taxpayer is an eligible caregiver with respect to an individual who is (i) the taxpayer, (ii) the taxpayer's spouse, or (iii) an individual with respect to whom a taxpayer is allowed a deduction under section 151 of the Code. The credit allowed under this section may not exceed the amount of tax imposed by this Part for the taxable year reduced by the sum of all credits allowed, except payments of tax made by or on behalf of the taxpayer. A nonresident or part‑year resident who claims the credit allowed by this subsection must reduce the amount of the credit by multiplying it by the fraction calculated under G.S. 105‑134.5(b) or (c), as appropriate.
(b)	Applicable Credit Amount. – The applicable credit amount is calculated as follows:
	Taxable Years Beginning	Applicable Credit Amount
	In 2002	$1,500
	In 2003	2,000
	In 2004	2,500
	After 2004	3,000.
(c)	Limitation Based on Adjusted Gross Income. – The amount of the credit allowed under subsection (a) of this section is reduced by one hundred dollars ($100.00) for each one thousand dollars ($1,000), or fraction thereof, by which the taxpayer's adjusted gross income exceeds the following thresholds:
(1)	One hundred fifty thousand dollars ($150,000) in the case of a married couple filing jointly.
(2)	Seventy-five thousand dollars ($75,000) in any other case.
(d)	No Double Benefit. – A credit may not be claimed with respect to an individual by more than one eligible caregiver. If an individual has more than one eligible caregiver, all eligible caregivers may, by agreement, designate which eligible caregiver may claim a credit under this section. If no agreement can be reached, only the eligible caregiver with the highest adjusted gross income may claim the credit allowed by this section.
(e)	Definitions. – The following definitions apply in this section:
(1)	Applicable individual. – An individual who has been certified by a physician within 12 months before the due date for filing the return as an individual with long-term care needs for a period (i) that is at least 180 consecutive days and (ii) a portion of which occurs within the taxable year.
(2)	Individual with long-term care needs. – An individual who meets one of the following requirements:
a.	The individual is at least six years of age and one of the following conditions applies:
1.	The individual is unable, without substantial assistance from another individual, to perform at least three activities of daily living, as defined in section 7702B(c)(2)(B) of the Code, due to a loss of functional capacity.
2.	The individual requires substantial supervision to protect the individual from threats to health and safety due to severe cognitive impairment and is unable to perform, without reminding or assistance, at least one activity of daily living, as defined in section 7702B(c)(2)(B) of the Code.
b.	The individual is at least two years of age but less than six years of age and is unable, without substantial assistance from another individual, to perform at least two of the following activities:  eating, transferring, or mobility.
c.	The individual is less than two years of age and requires specific durable medical equipment by reason of a severe health condition or requires a skilled practitioner trained to address the individual's condition to be available if the individual's parents or guardians are absent."
SECTION 3.  G.S. 105‑160.3(b) is amended by adding a new subdivision to read:
"(b)	The following credits are not allowed to an estate or trust:
…
(8)	G.S. 105-151.29. Credit for individuals with long-term care needs."
SECTION 4.  This act is effective for taxable years beginning on or after January 1, 2002.