Maximizing Year-End Insurance Deductions: What CT Home & Business Owners Should Know

As 2025 draws to a close, Connecticut home and business owners have a unique opportunity to maximize their year-end insurance deductions. Understanding the latest tax law changes and insurance deduction strategies can help you reduce your taxable income and improve your financial outlook. Here’s what you need to know about optimizing your insurance in CT.

Increased State and Local Tax (SALT) Deduction Cap

Connecticut residents benefit from a significant increase in the SALT deduction cap for 2025. The cap has risen from $10,000 to $40,000, providing substantial relief for those with high property taxes or state income taxes. This change is especially relevant for homeowners and business owners who itemize deductions and pay significant local taxes.

• The new cap applies to the 2025 tax year and will increase by 1% annually through 2029 before reverting to the previous threshold in 2030.
• This expanded deduction can be combined with other eligible expenses, such as insurance premiums, to maximize your overall tax benefit.

Long-Term Care Insurance Deductibility

Premiums paid for tax-qualified long-term care insurance are considered medical expenses and may be deductible if you itemize and your total medical expenses exceed 7.5% of your adjusted gross income. The deductible limit increases with age:

• Age 40 or less: $480
• Age 41–50: $900
• Age 51–60: $1,800
• Age 61–70: $4,810
• Over 70: $6,020

Business owners can also deduct long-term care insurance premiums for themselves and eligible employees, making this a valuable planning tool for those seeking to optimize insurance in CT.

Health Insurance Premiums and Expiring Subsidies

If you purchase health insurance through Access Health CT, be aware that enhanced premium tax credits are set to expire at the end of 2025. This could increase your out-of-pocket insurance costs by an average of $1,700 per year if Congress does not extend the subsidies. Consider prepaying premiums or reviewing your plan options before year-end to lock in savings and maximize deductions for insurance in CT.

Unemployment Insurance (SUI) Contributions

Connecticut employers are required to pay State Unemployment Insurance (SUI) taxes. For 2025, the taxable wage base is $26,100 per employee, with rates ranging from 1.9% to 6.8% depending on your claims history. These contributions are deductible business expenses, so ensure your payroll records are accurate and up to date to claim the full deduction for your insurance in CT.

Insurance Premiums as Business Expenses

Most business insurance premiums—including property, liability, and workers’ compensation—are fully deductible as ordinary and necessary business expenses. Review your policies and premium payments before year-end to ensure all eligible expenses are captured for your 2025 tax return.

• Review all insurance policies (home, auto, business, health, and long-term care) to ensure premiums are paid and documented before December 31.
• Consult with a tax advisor to determine if bunching deductions or prepaying premiums will help you exceed the standard deduction threshold.
• Keep detailed records of all insurance payments, especially if you plan to itemize or claim business deductions.
• Monitor legislative updates that may affect insurance deductions or credits for the coming year.

At D.M. Johnson Insurance Agency, we specialize in helping Connecticut residents and business owners navigate the complexities of insurance in CT. Our team stays up to date on tax law changes and deduction strategies to ensure you get the most value from your insurance policies.

Maximize your year-end deductions and secure your financial future—contact D.M. Johnson Insurance Agency today to review your insurance in CT and optimize your tax strategy.