Committee advances bill to let taxpayers deduct contributions to insurance-loss savings accounts, with guardrail work ahead

House Bill 3818 would let individuals deduct contributions to a qualified insurance-loss savings account and exempt the interest earned in those accounts from income tax; account funds could be withdrawn to pay deductibles for a primary residence or up to three vehicles or to cover expenses from damage, disaster or accidents.

Senator Comer (the bill sponsor) described the bill and said enacting language needs more work. Committee members raised multiple concerns: whether the bill should require a minimum holding period between deposit and withdrawal, how contributions would be limited to prevent gaming the deduction, and whether verification procedures (similar to those for health savings accounts) should be required. Senator Howard said the measure lacks definitions and verification and indicated he would vote no unless the language was tightened; other members said they supported further work on guardrails.

The committee agreed to strike the enacting clause to provide time to address the concerns and then held a roll-call vote on the bill as amended; the clerk recorded 9 ayes and 2 nays and the chair declared the bill passed as amended by the committee for further consideration.