(6) The cost of over-the-counter Nicotine Re-
placement Therapy (gum, patch, lozenges) is not 
covered by Medicare, and is rarely covered by private 
insurance. Fifteen states under Medicaid cover no 
Nicotine Replacement Therapy and many of the re-
maining 35 states do not cover all Nicotine Replace-
ment Therapies. Nicotine Replacement Therapy is 
rarely tax-deductible, and typically costs about $300 
for a suggested 10-week course of treatment. 
(7) The Guide to Community Preventive Serv-
ices: Tobacco Use Prevention and Control (CDC 
2000) and Treating Tobacco Use and Dependence: 
Clinical Practice Guideline (2000) recommended a 
reduction or elimination of out-of-pocket costs to in-
crease the use of tobacco use cessation treatments. 
(8) Under current law, unreimbursed tobacco 
use cessation counseling programs and prescribed 
nicotine-withdrawal drugs are considered expenses 
for medical care that are deductible subject to the 
7.5 percent of adjusted gross income limitation. 
(9) Two-thirds of all filers do not itemize.
SEC. 3. REFUNDABLE CREDIT FOR AMOUNTS PAID TO AS-
SIST INDIVIDUALS TO CEASE USING TO-
BACCO PRODUCTS. 
(a) IN GENERAL.—Subpart C of part IV of sub-
chapter A of chapter 1 of the Internal Revenue Code of 
1986 (relating to refundable credits) is amended by insert-
ing after section 35 the following new section: 
‘‘SEC. 35A. CERTAIN EXPENSES TO ASSIST INDIVIDUALS TO 
CEASE USING TOBACCO PRODUCTS. 
‘‘(a) ALLOWANCE OF CREDIT.—In the case of an in-
dividual, there shall be allowed as a credit against the tax 
imposed by this subtitle an amount equal to the qualified 
tobacco use cessation expenses paid by the taxpayer dur-
ing the taxable year for the benefit of the taxpayer, the 
taxpayer’s spouse, or any dependent of the taxpayer. 
‘‘(b) LIMITATION.—The credit allowed under this sec-
tion shall not exceed—
‘‘(1) $300 for amounts described in subsection 
(c)(1)(A), and 
‘‘(2) $100 for amounts described in subsection 
(c)(1)(B). 
‘‘(c) QUALIFIED TOBACCO USE CESSATION EX-
PENSES.—For purposes of this section—
‘‘(1) IN GENERAL.—The term ‘qualified tobacco 
use cessation expenses’ means expenses—
‘‘(A) for products determined by the Food 
and Drug Administration to be safe and effec-
tive in promoting a reduction in the use of to-
bacco products by individuals, and 
‘‘(B) for counseling for cessation of to-
bacco use. 
‘‘(2) COUNSELING.—
‘‘(A) IN
GENERAL.—Subject to subpara-
graph (B), the term ‘counseling for cessation of 
tobacco use’ means diagnostic, therapy, and 
counseling services for cessation of tobacco use 
for individuals who use tobacco products or who 
are being treated for tobacco use which are fur-
nished—
‘‘(i) by or under the supervision of a 
physician, or 
‘‘(ii) by any other health care profes-
sional who is legally authorized to furnish 
such services under State law (or the State 
regulatory mechanism provided by State 
law) of the State in which the services are 
furnished. 
‘‘(B) LIMITATION.—Such term is limited 
to—
‘‘(i) services recommended in ‘Treat-
ing Tobacco Use and Dependence: A Clin-
ical Practice Guideline’, published by the 
Public Health Service in June 2000, or 
any 
subsequent 
modification 
of 
such 
Guideline, and 
‘‘(ii) such other services that the Sec-
retary of Health and Human Services rec-
ognizes to be effective.’’
(b) TECHNICAL AMENDMENTS.—
(1) Paragraph (2) of section 1324(b) of title 
31, United States Code, is amended by inserting ‘‘or 
36’’ after ‘‘section 35’’. 
(2) The table of sections for subpart C of part 
IV of subchapter A of chapter 1 of such Code is 
amended by inserting after the item relating to sec-
tion 35 following new item:
‘‘Sec. 35A. Certain expenses to assist individuals to cease using 
tobacco products.’’
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
the date of the enactment of this Act.
Æ