House Bill No. by Representative Owen proposes to enact a new income tax deduction for individuals who receive hardship distributions from retirement accounts due to terminal illnesses. The bill introduces new legal language to define "hardship distribution" as a withdrawal made from a retirement plan participant's elective deferral account due to an immediate and serious financial need. It also defines "qualifying taxpayer" as an individual diagnosed with a terminal illness by a licensed physician, which extends to their spouse in the case of married joint filers. The term "terminal illness" is referenced as defined in existing law (R.S. 40:1169.3).

The provisions of this bill will apply to taxable periods beginning on or after January 1, 2026, and the act will become effective on that same date. The new deduction aims to provide financial relief to those facing significant health challenges, allowing them to better manage their financial obligations during difficult times.