Healthcare can be one of the largest annual expenses for American families. Fortunately, the IRS provides a tax break in the form of the medical expense deduction. If you have substantial out-of-pocket healthcare costs, you may be able to deduct a portion of these expenses on your federal tax return. However, navigating what qualifies and how to claim it can be complex. This guide explains eligible expenses and offers strategies to help you get the biggest deduction possible.
Who Qualifies for the Medical Expense Deduction?
To claim the medical expense deduction, you must itemize your deductions on Schedule A (Form 1040). This means your total itemized deductions—including medical expenses, mortgage interest, charitable contributions, and taxes—must be greater than the standard deduction.
For 2025, standard deduction amounts are:
- Single filers: $14,000
- Married filing jointly: $28,000
- Head of household: $20,800
If you don’t exceed these amounts with itemized deductions, the standard deduction will offer more tax savings and you won’t benefit from deducting medical expenses.
Understanding the 7.5% AGI Threshold
Even if you itemize, you can only deduct the portion of your unreimbursed medical expenses that exceed 7.5% of your adjusted gross income (AGI). The threshold is consistent for all filing statuses.
Example: If your AGI is $60,000, then the first $4,500 of medical expenses (7.5% of $60,000) is not deductible. If you spent $8,000, you can deduct $3,500 ($8,000 – $4,500).
Whose Expenses Can You Deduct?
You can deduct qualified medical expenses that you paid for:
- Yourself
- Your spouse
- Your dependents
You may also deduct expenses for someone who would qualify as your dependent except for failing the gross income or joint return test, such as an elderly parent you support.
What Medical Expenses Are Eligible?
The IRS allows a broad range of expenses that fall under the categories of diagnosis, cure, mitigation, treatment, or prevention of disease. Here’s what generally qualifies:
Doctor, Hospital, and Treatment Costs
- Doctor and specialist fees
- Hospital stays, surgeries, and outpatient care
- Nursing services (including in-home care)
Medications and Medical Supplies
- Prescription drugs (must be legally prescribed)
- Insulin (even without prescription)
- Medical devices (CPAP, blood sugar monitors)
- Hearing aids and batteries
Dentistry and Vision
- Dental exams, fillings, braces, and dentures
- Eye exams, glasses, contact lenses, and LASIK
Mental Health Services
- Therapy, psychiatric treatment, and substance abuse treatment
- Prescribed medications for mental health
Insurance Premiums
- Health, dental, and vision premiums paid with after-tax dollars
- Long-term care insurance (subject to age-based limits)
Transportation and Travel for Care
- Mileage to and from appointments (using IRS medical mileage rate)
- Bus, taxi, train, and airfare for out-of-town treatment
- Hotel stays up to $50/night per person while receiving medical care
Other Specialized Costs
- In-vitro fertilization and fertility treatments
- Guide dogs or service animals (including food, grooming, and vet care)
- Smoking cessation and weight-loss programs (if prescribed for a diagnosed condition)
Non-Eligible Medical Expenses
These commonly mistaken expenses are not deductible under IRS rules:
- Cosmetic surgery (unless needed for a medical condition)
- Non-prescription over-the-counter meds (except insulin or if prescribed)
- Toiletries, vitamins, and general wellness items
- Gym memberships or health club dues (unless prescribed for a condition)
- Medical marijuana, even if legal in your state
How to Report the Deduction
If you qualify to itemize, medical expenses are reported on Schedule A, Line 1. You will:
- Total your qualified expenses
- Calculate 7.5% of your AGI
- Subtract the AGI threshold from your total expenses
- Enter the result as your deductible amount
Include this amount with other itemized deductions and report the total on Form 1040, Line 12a.
Tips to Maximize Your Medical Deduction
1. Bunch Expenses into One Year
If you have flexibility, consider timing elective procedures or treatments so they fall within the same tax year. This helps push you over the 7.5% threshold.
2. Track All Small Costs
Expenses like parking fees, tolls, bandages, or minor prescriptions may seem insignificant individually, but they can add up significantly when combined.
3. Use After-Tax Money
Only expenses paid with after-tax dollars are eligible. If your premiums or expenses were paid pre-tax through an employer plan, you cannot deduct them again.
4. Claim for Dependents
Even if you didn’t claim someone as a dependent, you may still deduct their medical expenses if you provided over 50% of their support and meet IRS tests.
5. Keep Thorough Records
Maintain receipts, billing statements, mileage logs, and canceled checks to substantiate your deduction. The IRS may require documentation during an audit.
Interaction with Health Savings Accounts (HSAs) and FSAs
Medical expenses paid through Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs) are not deductible. You’ve already received a tax benefit for using those funds. Be sure to track which expenses were paid out-of-pocket versus through one of these accounts.
Common Mistakes to Avoid
- Failing to meet the AGI threshold before claiming a deduction
- Including costs reimbursed by insurance or employer plans
- Double-dipping with HSA/FSA funds
- Overstating cosmetic or non-essential procedures
Conclusion
The medical expense deduction can be a powerful tool for those facing high out-of-pocket healthcare costs, especially for seniors, the chronically ill, and families managing long-term treatment. To take full advantage of this deduction, you must track eligible expenses, understand what qualifies, and consider strategies like bunching costs or maximizing dependent care. By itemizing thoughtfully and maintaining good records, you can reduce your taxable income and potentially increase your IRS refund.
