Texas is known for its wide open spaces, economic opportunities, and favorable tax climate. One of the most appealing aspects of living in Texas is the absence of a personal state income tax. For taxpayers, this means simplified state tax filing—but it also means that deductions, including those for medical expenses, are limited to your federal return. In this blog, we’ll explore what medical deductions look like for Texans, how the lack of a state income tax impacts your tax planning, and what you still need to track for IRS purposes.
🏛 No State Income Tax in Texas
Texas is one of nine states in the U.S. that do not levy a personal income tax. This means residents are not required to file a state-level income tax return. While this offers simplicity and reduces the overall tax burden, it also limits the availability of state-specific deductions—including medical expense deductions, which are common in states with income tax regimes like California or New York.
Simply put, because there’s no state income tax in Texas, there’s no state-level medical deduction to claim.
💊 Where Medical Deductions Still Matter: Federal Tax Returns
Even though Texans don’t have a state return to file, medical expense deductions are still very relevant at the federal level. If you itemize deductions on your IRS Form 1040, you may deduct qualified unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).
So while your Texas residency means no medical deductions at the state level, tracking these expenses can still result in significant tax savings on your federal return—especially if you or your family have high medical costs during the year.
🧾 What Medical Expenses Are Deductible Federally?
The IRS outlines deductible medical expenses in Publication 502. Common eligible expenses include:
- Payments to doctors, dentists, surgeons, and chiropractors
- Hospital or clinic fees
- Prescription medications and insulin
- Medical aids such as eyeglasses, hearing aids, and crutches
- Transportation to medical appointments (mileage, tolls, and parking)
- Health insurance premiums (if paid with after-tax dollars)
- Long-term care services and eligible premiums
Note: Expenses reimbursed by insurance or paid with pre-tax accounts (like HSAs or FSAs) are not deductible.
📋 How to Claim Medical Deductions as a Texan
To benefit from medical deductions as a Texas resident, you must:
- Choose to itemize deductions instead of taking the standard deduction
- Track and calculate all qualifying medical expenses for the year
- Determine your AGI and compute 7.5% of that amount
- Subtract the 7.5% threshold from your total medical expenses
- Enter the excess on Line 1 of Schedule A (Itemized Deductions) of IRS Form 1040
Example: If your AGI is $60,000, then 7.5% equals $4,500. If your unreimbursed medical expenses are $6,000, you can deduct $1,500 on your federal tax return.
📂 Why You Should Still Track Medical Expenses in Texas
Even though the state of Texas doesn’t require a personal income tax return, tracking medical expenses can serve several important purposes:
- Federal itemized deductions: Potentially reduce your taxable income on your IRS return
- HSA reimbursements: If you pay out of pocket, you may later reimburse yourself with tax-free HSA funds
- FSA substantiation: Employer plans may require proof of qualified expenses
- Insurance appeals: Supporting documentation helps in disputes or policy claims
- Disaster-related claims: Medical expenses might be part of FEMA or insurance reporting after emergencies
📅 Planning Strategies for Texans
Because Texans can’t take advantage of any state medical deductions, your focus should be on maximizing the federal benefit. Consider these tips:
- Bunch medical expenses: Schedule elective surgeries or treatments in the same year to exceed the 7.5% AGI threshold
- Track mileage: Every medical-related trip adds value to your deduction
- Pay medical bills before December 31: Only payments made within the calendar year are deductible
- Evaluate HSA use: Pay cash and reimburse yourself later to potentially claim a deduction first
🔁 Summary: Texas vs. Income-Tax States
| Feature | Texas | California (for example) |
|---|---|---|
| State Income Tax | None | Yes (progressive) |
| State Medical Deduction | Not applicable | Yes, based on modified AGI |
| Federal Medical Deduction | Yes (over 7.5% of AGI) | Yes (over 7.5% of AGI) |
| Need to Track Expenses for State Filing | No | Yes |
✅ Conclusion
Living in Texas provides a significant tax advantage thanks to the absence of a state income tax—but it also means you won’t see any additional benefits for your medical expenses at the state level. However, don’t let that discourage you from tracking these expenses carefully. With smart planning and thorough documentation, you can still capitalize on federal tax deductions and other reimbursement opportunities. So while your Texas residency frees you from state filing obligations, there’s still good reason to maintain accurate records of every medical dollar spent.
