Medical expenses are often unpredictable and can create a significant financial burden. Fortunately, the IRS allows taxpayers to deduct qualified medical expenses that exceed a certain percentage of their adjusted gross income (AGI). However, many taxpayers find it difficult to surpass that threshold in any given year. One powerful tax-saving strategy to consider is “bunching” medical expenses. This technique involves timing and concentrating deductible healthcare costs into a single tax year to increase the likelihood of exceeding the deduction threshold. In this detailed guide, we explain how bunching works, the 2025 rules for medical expense deductions, and how to implement the strategy effectively.
Understanding the Medical Expense Deduction Threshold
For the 2025 tax year, the IRS permits taxpayers who itemize deductions to deduct unreimbursed medical and dental expenses that exceed 7.5% of their AGI. This threshold applies to all taxpayers, regardless of age. If your AGI is $80,000, for example, the first $6,000 (7.5% of $80,000) of your medical expenses is not deductible. Only the amount above that is eligible for a deduction.
This threshold can be a high bar for many individuals. Routine expenses such as annual checkups, co-pays, and prescriptions may not be enough to qualify unless you experience major medical procedures or conditions in a given year. That’s where the bunching strategy becomes useful.
What Is Bunching Medical Expenses?
Bunching medical expenses refers to intentionally timing the payment or scheduling of large or elective medical expenses into a single calendar year. The goal is to increase your total out-of-pocket medical spending in one year so it exceeds the 7.5% AGI threshold — thus allowing you to claim a deduction on your tax return for that year. In the alternate year, you might use the standard deduction.
This strategy can be particularly effective if your medical expenses are discretionary or predictable, such as dental work, elective surgeries, or recurring treatments. It can also work well for families managing ongoing care for dependents or for older taxpayers with long-term care needs.
How Bunching Works: A Simple Example
Consider this example to see how bunching can save you money:
- AGI: $100,000
- Medical Expenses Spread Over Two Years: $6,000 in 2025 and $6,000 in 2026
- Threshold Each Year (7.5% of AGI): $7,500
In this scenario, neither year’s expenses exceed the threshold, so you can’t deduct any amount.
Now let’s say you choose to move some planned medical procedures from 2026 into 2025, bringing your 2025 total to $12,000 and reducing 2026 to $0.
- 2025 Medical Expenses: $12,000
- Deductible Portion (above $7,500): $4,500
By bunching expenses into one year, you’ve now unlocked a $4,500 deduction, which could save hundreds in taxes, depending on your tax bracket.
Common Medical Expenses Suitable for Bunching
Not all medical expenses can be easily rescheduled, but many can. Here are common types of healthcare costs that are suitable for bunching into a single year:
- Elective surgeries or procedures (e.g., LASIK, joint replacement)
- Dental treatments (braces, crowns, implants)
- Hearing aids and related services
- Vision care, including eyeglasses and exams
- Physical therapy or chiropractic care
- Mental health counseling and therapy sessions
- Long-term care expenses or insurance premiums (if eligible)
- In-home nursing or home health aides
- Prepaying for medical services when allowed
Keep in mind that to qualify, these expenses must be medically necessary and not reimbursed by insurance or paid through a pre-tax plan like an HSA or FSA.
Strategic Timing Is Key
To successfully execute a bunching strategy, timing matters. You need to incur and pay for the expenses within the same tax year. The IRS allows you to deduct expenses in the year they were paid, not necessarily when the treatment occurred. This opens the door for prepaying certain costs if allowed by your provider.
For example, if you plan a major dental procedure for January 2026, but your medical costs are already nearing the threshold in 2025, you might opt to schedule and pay for the procedure in December 2025 instead to ensure the expense counts in the same year.
Coordinating with Other Deductions
Bunching works best when combined with other itemized deductions such as:
- Mortgage interest
- Charitable contributions
- State and local taxes (SALT deduction up to $10,000)
If your total itemized deductions exceed the standard deduction ($14,600 for single and $29,200 for married filing jointly in 2025), you’ll benefit more from itemizing. Bunching multiple categories into the same year helps cross that threshold.
Interaction with Health Savings Accounts (HSAs)
If you contribute to a Health Savings Account, you may already be paying for medical expenses with pre-tax dollars. In that case, those expenses cannot also be deducted as itemized deductions. However, you can choose to save HSA funds and pay with after-tax dollars in a high-expense year to take advantage of bunching if the deduction is more beneficial than the HSA tax shelter.
Recordkeeping Tips
To take advantage of the medical expense deduction, especially when using bunching, meticulous recordkeeping is essential. Ensure you keep:
- Receipts and invoices for all payments
- Proof of payment (credit card, bank statements)
- Doctor’s notes or prescriptions for medical equipment
- Mileage logs for travel to and from appointments
- Documentation of any reimbursements from insurance or HSAs
These records will support your deduction in the event of an IRS audit.
Limitations of the Bunching Strategy
While bunching can be highly effective, it’s not always practical for every taxpayer. Limitations include:
- Not all treatments can be rescheduled due to urgency or provider availability
- Bunching could cause financial strain if too many expenses are paid in a short time
- Medical bills paid with HSA or FSA funds aren’t eligible for the itemized deduction
- Inconsistent income may impact the AGI and change the effectiveness of the strategy
Nevertheless, for those who can plan in advance, the potential savings can be substantial.
When to Seek Professional Advice
Given the complexity of tax laws and the importance of timing, it’s often wise to consult a tax advisor before implementing a bunching strategy. A professional can help you:
- Estimate your AGI and likely threshold
- Evaluate whether you should itemize or take the standard deduction
- Identify deductible vs. non-deductible expenses
- Coordinate your bunching strategy with other financial planning moves
Conclusion: A Proactive Path to Tax Savings
Bunching medical expenses is a proactive tax strategy that allows you to convert necessary healthcare spending into meaningful tax savings. By timing and concentrating medical payments into a single tax year, you increase your chances of surpassing the 7.5% AGI threshold and qualifying for a deduction. While this strategy requires planning and good recordkeeping, it can result in hundreds or even thousands of dollars in tax relief.
Start planning early in the year, evaluate your expected income and medical needs, and coordinate with your healthcare providers and tax advisor to implement an effective bunching plan in 2025.
