For many Americans, healthcare costs represent one of the largest and most unpredictable household expenses. The good news is that the IRS allows you to deduct a portion of these costs, providing significant tax relief in years with high medical bills. However, the rules can be complex. This guide provides a comprehensive overview of what medical expenses you can and cannot deduct for the 2025 tax year (the return you will file in early 2026).
The Two Golden Rules of Medical Deductions
Before you even think about what qualifies, you must meet two fundamental requirements:
- The 7.5% AGI Threshold: You can only deduct the amount of qualifying medical expenses that is more than 7.5% of your Adjusted Gross Income (AGI). For example, if your AGI is $80,000, your threshold is $6,000 ($80,000 x 0.075). If you have $10,000 in medical bills, you can deduct $4,000 ($10,000 – $6,000).
- You Must Itemize: This deduction is an itemized deduction. You can only claim it if you choose to itemize on Schedule A instead of taking the standard deduction.
If you can clear both of these hurdles, it’s time to start adding up your qualifying expenses.
Direct Medical Care & Professional Services
This category includes payments for the diagnosis, cure, mitigation, treatment, or prevention of disease.
- Payments to doctors, physicians, surgeons, and specialists.
- Payments to dentists, orthodontists, and oral surgeons.
- Payments to chiropractors, osteopaths, and physical therapists.
- Payments to psychiatrists, psychologists, and other mental health professionals.
- Fees for hospital services, including room and board.
- Fees for nursing home care, if the primary reason for being there is to get medical care.
- Payments for acupuncture treatments.
Insurance, Prescriptions, and Medical Equipment
This is an area where many people miss out on significant deductions. Don’t forget to include:
- Insurance Premiums: The amounts you pay for policies that cover medical care are deductible. This includes premiums for health, dental, and qualified long-term care insurance (subject to age-based limits). Crucially, this also includes amounts paid for Medicare Part B and Part D.
- Prescription Medications: The cost of legally prescribed drugs and insulin.
- Medical Aids & Equipment: The cost of glasses, contact lenses (including cleaning solution), hearing aids (including batteries), dentures, wheelchairs, walkers, and crutches.
Transportation, Lodging, and Other Qualifying Expenses
The definition of medical care extends beyond the doctor’s office.
- Transportation Costs: You can include the cost of getting to and from essential medical care. This includes bus fare, ambulance services, or your own car expenses. For car expenses, you can deduct actual costs (gas, oil) or use the standard medical mileage rate (the 2025 rate will be announced by the IRS late in the year; it was 21 cents per mile for 2024).
- Lodging: The cost of lodging while away from home for medical care at a hospital or similar institution is deductible (up to $50 per night per person).
- Therapeutic Programs: Costs for smoking-cessation programs and weight-loss programs for a specific disease diagnosed by a physician (e.g., obesity, hypertension).
- Special Education: The cost of tuition for a school that provides special education to a child with a learning disability caused by a mental or physical impairment.
- Home Improvements: The cost of installing ramps, grab bars, widening doorways, or other capital expenses for a medical reason can be deducted, to the extent the cost doesn’t increase the value of your property.
What Does NOT Qualify as a Medical Deduction?
It’s just as important to know what you can’t deduct to avoid errors on your return.
Your Action Plan for the Rest of 2025
To successfully claim this deduction, organization is key. Don’t wait until next tax season to scramble for receipts.
- Start a System Now: Get a large envelope, a folder, or create a spreadsheet today. Label it “2025 Medical Expenses.”
- Keep Everything: Place every single bill, pharmacy receipt, co-pay invoice, and Explanation of Benefits (EOB) from your insurer in your file.
- Track Your Miles: Keep a small notebook in your car and jot down the date, reason, and round-trip mileage for every trip to a doctor, dentist, or pharmacy.
By tracking these costs throughout the year, you’ll have an accurate and complete total, making it easy to see if you can clear the 7.5% hurdle and claim this valuable deduction.
Disclaimer: This guide is for informational purposes only and is not a substitute for professional tax advice. The IRS rules are detailed and subject to change. Please consult IRS Publication 502, Medical and Dental Expenses, or a qualified tax professional for guidance on your specific situation.
