When it comes to tax deductions for medical expenses, federal and state rules can diverge significantly. For Georgia taxpayers, it’s crucial to understand whether the state conforms to federal guidelines for deducting medical expenses on state returns. While Georgia does adopt many of the federal definitions for qualified expenses, it applies its own income threshold and calculation method, creating key differences for those seeking to itemize. In this blog, we’ll explore the extent of Georgia’s conformity with federal medical deduction rules and what it means for taxpayers in 2025.
🔍 Overview of Federal Medical Deduction Rules
Under federal tax law, as governed by the IRS, medical and dental expenses are deductible if they exceed 7.5% of a taxpayer’s adjusted gross income (AGI). These deductions are reported on Schedule A of Form 1040, and only those who itemize deductions can take advantage of them. Qualified medical expenses under federal rules include a wide range of unreimbursed costs:
- Payments to doctors, surgeons, dentists, and specialists
- Hospital stays, lab tests, surgeries, and prescription medications
- Health insurance premiums (if paid with after-tax dollars)
- Medical equipment such as wheelchairs, hearing aids, and prosthetics
- Long-term care and related insurance (with IRS-imposed limits)
- Transportation costs for medical treatment, including mileage and parking
Only the portion of unreimbursed expenses that exceeds 7.5% of AGI is deductible for federal purposes. Reimbursed or pre-tax expenditures through HSAs, FSAs, or employer coverage are not eligible.
🏛️ Georgia’s Medical Deduction Rules: Conformity and Departure
Georgia follows the general federal definition of what constitutes a qualified medical expense. However, there are important differences in how those deductions are allowed on the state return:
- Conformity: Georgia accepts the same definitions as the IRS for which expenses qualify as “medical and dental expenses.”
- Departure: Georgia imposes a stricter AGI threshold of 10% instead of the federal 7.5% for claiming a deduction.
- Form used: Georgia taxpayers must file Form 500 with Schedule A (Georgia version) to claim itemized deductions, including medical expenses.
- No HSA deduction: Georgia does not conform to federal treatment of Health Savings Accounts (HSAs); certain HSA-related deductions must be added back to income.
📉 The 10% AGI Threshold: A Key Difference
For Georgia residents, the deduction for medical expenses is limited to the amount that exceeds 10% of the taxpayer’s AGI. This threshold is significantly higher than the federal 7.5%, meaning fewer taxpayers will benefit from medical deductions on their Georgia return.
Example: If your AGI is $70,000, your Georgia deduction begins only after $7,000 in qualified unreimbursed medical expenses, compared to $5,250 under federal rules. That $1,750 difference could be the deciding factor in whether itemizing is worthwhile at the state level.
🧾 How to Report Medical Deductions on Georgia Return
To deduct medical expenses in Georgia, follow these steps:
- Calculate your total qualified unreimbursed medical expenses for the tax year.
- Determine 10% of your AGI.
- Subtract the threshold from your total medical expenses—only the remainder is deductible.
- Report the deductible amount on Georgia Schedule A and attach it to Form 500.
📝 Qualified Medical Expenses (Same as Federal)
Even though the threshold differs, Georgia uses the same list of qualified medical expenses as the IRS. Examples include:
- Physician and hospital bills
- Prescription drugs and insulin
- Vision care, including glasses and contact lenses
- Dental care and orthodontics
- Mental health services
- Transportation to medical appointments
Keep in mind: Any amounts reimbursed through insurance, employer benefits, or pre-tax accounts cannot be included in your deduction.
📚 Documentation Requirements
For both federal and Georgia returns, taxpayers should retain detailed documentation of all claimed medical expenses:
- Invoices and receipts from providers
- Insurance EOBs (explanation of benefits)
- Mileage logs for travel to and from treatment centers
- Prescription records
- Canceled checks or payment confirmations
In case of an audit, proper documentation is crucial to validate your claim.
🔧 Tax Planning Tips for Georgia Residents
- Time your expenses: Consider bunching medical expenses into a single year to cross the 10% threshold.
- Evaluate both federal and state: You may qualify for a federal deduction but not a Georgia deduction.
- Include travel costs: Don’t overlook medical transportation expenses—they can add up.
- Review HSA implications: Georgia may require you to reverse federal HSA deductions.
🧠 Final Thoughts
In summary, Georgia does conform to the federal definition of what qualifies as a medical expense, but it diverges significantly in its application of the AGI threshold. The state’s 10% threshold means taxpayers need higher medical costs to claim any benefit. Understanding this difference is crucial for accurate state filings and for determining whether itemizing your Georgia return makes financial sense.
Taxpayers who anticipate high medical expenses should plan accordingly, track every eligible cost, and consider the timing of their expenditures. If in doubt, consulting a qualified tax advisor familiar with both federal and Georgia tax rules can ensure you’re maximizing your deductions while staying compliant.
