March 03, 2017

States Propose Medical Services Tax Exemptions

Lawmakers in Hawaii, Minnesota and West Virginia have proposed legislation in 2017 that would exempt specific health care services from state taxation.

An economic justification for such reforms can be found in the AMA Economic Impact Study. It presents data showing how physician practices have a huge positive impact on the national and local economies. It demonstrates that each physician in the U.S. supports an average of $2.2 million in annual economic output, which contributes $1.6 trillion of annual overall economic output to the nation. The work of each U.S. physician supports 13.84 jobs, with all physicians collectively contributing to the existence of 10 million jobs.

Taxes levied against physician practices inhibit the health care provider’s ability to support their local communities through the creation of jobs with their related wages and benefits. Because physician practices are vital economic drivers in local communities, the following states are considering making changes to existing provider tax rules:

Hawaii HB 350

Other Links:

PDF Version
State Record

Summary: Provides a general excise tax exemption for medical services after Dec.31, 2017.

Minnesota SF 554

Other Links

State Record

Summary: Exempts certain health care provider tax supplemental payments from state taxation.

West Virginia SB 46

Other Links:

State Record

Summary: Excluding mobile x-ray services from health care provider tax.