For residents of states that don’t impose a personal income tax—such as Florida, Texas, Alaska, and Washington—the process of tax planning is significantly streamlined. There’s no need to file a state income tax return, and with that comes a notable absence: the opportunity to claim itemized deductions, including for medical expenses, at the state level. This leaves many taxpayers wondering whether they should focus exclusively on the federal deduction. In this blog, we’ll explore how living in a no-income-tax state changes your approach to medical expense planning and how to maximize the benefits that still apply.
📍 States Without Personal Income Tax
As of 2025, the following states do not impose a personal income tax:
- Florida
- Texas
- Alaska
- Wyoming
- South Dakota
- Washington
- Nevada
- Tennessee
- New Hampshire (limited—only on interest and dividends)
Because these states have no personal income tax, they do not offer deductions for medical expenses. All deduction-based planning must therefore be focused on federal taxes.
🏥 Medical Deductions at the Federal Level: Still Relevant
Even without state-level deductions, taxpayers can still benefit from medical expense deductions on their federal income tax return. The IRS allows you to deduct qualifying medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI), as long as you itemize deductions on Schedule A of Form 1040.
Example: If your AGI is $60,000, you may only deduct the portion of qualified expenses that exceeds $4,500. So if you spent $7,000 on medical care, $2,500 would be deductible federally.
💡 What Medical Expenses Qualify?
To maximize your federal deduction, it’s essential to understand which expenses qualify. According to IRS Publication 502, eligible expenses include:
- Doctor and hospital visits
- Surgery and medical procedures
- Dental and vision care
- Prescription medications and insulin
- Medical devices (e.g., wheelchairs, hearing aids)
- Transportation for medical treatment
- Long-term care services
- Insurance premiums (under specific conditions)
Expenses that are reimbursed or paid with pre-tax dollars (like from an HSA or FSA) do not count toward the deduction.
📋 Federal Planning Strategies to Consider
Since no state-level benefits are available, your focus should be on optimizing your federal deductions. Here are some smart strategies:
- Bunching expenses: Group elective procedures into one year to exceed the 7.5% threshold
- Track mileage: Travel to and from medical appointments is deductible at the IRS-approved rate
- Pay by December 31: Expenses must be paid within the calendar year to be counted
- Include all eligible dependents: Expenses for your spouse and qualifying dependents also count
- Keep records: Save receipts, invoices, and proof of payment for all expenses claimed
❓Should You Itemize or Take the Standard Deduction?
Medical deductions are only available if you itemize your deductions on your federal return. In 2025, the standard deduction is:
- $14,600 for single filers
- $21,900 for heads of household
- $29,200 for married couples filing jointly
If your total itemized deductions—including medical, mortgage interest, state and local taxes (SALT), and charitable donations—don’t exceed the standard deduction, you’ll receive no tax benefit from tracking medical expenses. However, if you have high medical costs in a single year, itemizing may yield more savings.
🧾 When It Still Makes Sense to Track Medical Expenses
Even if you don’t expect to itemize this year, tracking your medical expenses can still be helpful:
- Health Savings Accounts (HSAs): Keep records in case you reimburse yourself tax-free in future years
- Flexible Spending Accounts (FSAs): Employers often require proof of payment for claims
- Medical budgeting: Helps you anticipate and manage future out-of-pocket costs
- Audit defense: Documentation is essential if your federal return is reviewed
🌎 Special Considerations for Retirees and High-Cost Areas
Residents of no-income-tax states who are also retirees or living in high-cost medical regions may be more likely to benefit from the federal medical deduction. Seniors over age 65 often face higher medical expenses and may cross the 7.5% threshold more easily. Likewise, those undergoing long-term care or major surgeries should consider itemizing their deductions.
🧠 Final Thoughts: Is Federal Focus Enough?
Yes—if you live in a state with no personal income tax, your only opportunity for medical expense deductions lies with the IRS. While you don’t have to maintain records for state filing, federal deductions, HSA/FSA compliance, and medical budgeting still make detailed tracking worthwhile.
In essence, planning your medical spending remains a vital tax strategy. The key is to understand that while your state may not require the data, the IRS—and your own financial goals—still do. By concentrating your planning at the federal level and taking advantage of available tools and timing strategies, you can make the most of your qualified expenses—even in a no-income-tax state.
