Medical costs can significantly impact your finances, especially in years when you face substantial out-of-pocket expenses. Fortunately, both the federal and state tax systems offer some relief through itemized deductions. If you’re a resident of New York, you might be wondering which medical expenses you can deduct on your state income tax return. This blog provides a detailed overview of what qualifies for deduction on your New York State (NYS) return, how it differs from the federal rules, and how to navigate Form IT-196 to your advantage in 2025.
1. Overview of New York State Medical Expense Deductions
New York State largely conforms to the federal definition of allowable medical expenses. However, NYS allows a deduction for medical expenses only if you itemize deductions on your federal and state returns. Unlike some states that don’t allow any medical deductions, New York offers residents the chance to include qualified unreimbursed medical and dental expenses as part of their itemized deductions.
2. Federal vs. New York: Key Similarities and Differences
Similarity: Both the IRS and New York State allow deductions for unreimbursed medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI).
Difference: While the federal return uses Schedule A, New York uses Form IT-196 (Itemized Deductions), which largely mirrors Schedule A but has some NY-specific rules.
3. Who Can Claim Medical Deductions on Their NY Return?
To deduct medical expenses on your New York State return, you must:
- Itemize deductions on your federal tax return using Schedule A
- Choose to itemize on your New York return using Form IT-196
- Have total medical and dental expenses that exceed 7.5% of your federal AGI
If you take the standard deduction federally, you cannot claim itemized deductions in New York either. In such cases, medical expenses won’t offer any tax benefit on the NY return.
4. What Medical Expenses Are Deductible in New York?
New York follows the IRS Publication 502 guidelines for allowable medical and dental expenses. Some common deductible expenses include:
- Fees paid to doctors, dentists, surgeons, chiropractors, and psychiatrists
- Hospital services and surgical procedures
- Prescription medications and insulin
- Long-term care services and eligible insurance premiums (up to federal limits)
- Medical equipment and supplies (wheelchairs, crutches, hearing aids)
- Vision-related expenses (eyeglasses, contact lenses, eye surgery)
- Transportation to medical facilities (including mileage, parking, and tolls)
- Dental treatments, including cleanings, fillings, and orthodontics
- Psychological and psychiatric counseling
- Nursing home care (if primarily for medical treatment)
Expenses must be paid during the tax year and not reimbursed by insurance, Health Savings Accounts (HSAs), or Flexible Spending Accounts (FSAs).
5. What Medical Expenses Are Not Deductible?
Not all health-related costs qualify for the deduction. Expenses that are not deductible include:
- Cosmetic surgery (unless medically necessary)
- Non-prescription medications (except insulin)
- General health products like vitamins, toothpaste, or supplements
- Gym memberships or health club dues
- Funeral or burial costs
- Controlled substances not approved by the FDA
6. Where to Report Medical Deductions on NYS Form IT-196
To report your medical deductions on the New York return:
- Complete federal Schedule A to calculate deductible medical expenses
- Transfer the amount from federal Schedule A, Line 4 (medical expenses after 7.5% AGI threshold), to Line 1 of NY Form IT-196
- Add it to your total itemized deductions on IT-196
- Carry the total deduction over to Form IT-201, Line 34 (for full-year residents)
It’s important to ensure that the figures match your federal filing, as New York’s system relies heavily on information from your federal return.
7. Example: Calculating Your NY Medical Deduction
Scenario:
- Federal AGI: $100,000
- Total unreimbursed medical expenses: $11,000
- 7.5% of AGI: $7,500
- Deductible amount: $3,500 ($11,000 – $7,500)
You would report this $3,500 amount on Line 1 of IT-196 and include it in your total itemized deductions, provided you meet the other eligibility requirements.
8. Additional Tips for Maximizing Your NY Medical Deduction
- Bunch your medical expenses: If possible, schedule elective procedures, dental work, or buy prescription glasses in the same year to exceed the 7.5% threshold.
- Track transportation costs: Driving to and from medical appointments counts at the IRS mileage rate (22 cents per mile in 2025, subject to change).
- Keep receipts and records: You’ll need documentation to prove payment and eligibility for each expense, especially in the event of an audit.
- Consider long-term care insurance: Premiums for qualified LTC plans are deductible within age-based limits.
9. Itemizing vs. Standard Deduction in New York
For many taxpayers, itemizing only makes sense if total deductions exceed the standard deduction. In New York, standard deduction amounts for 2025 are projected to be:
- Single: $8,000
- Married Filing Jointly: $16,050
- Head of Household: $11,200
If your total itemized deductions, including medical expenses, exceed these thresholds, you should itemize. Otherwise, claim the standard deduction.
10. Final Thoughts: Is It Worth Itemizing in New York?
Medical deductions can provide valuable tax relief, especially in years with significant health-related costs. However, because you must itemize both federally and at the state level, it’s essential to weigh whether your total deductions justify skipping the standard deduction.
In New York, if your unreimbursed medical expenses exceed 7.5% of your AGI and you have other deductible expenses like mortgage interest, property taxes, or charitable contributions, itemizing may result in a lower tax bill. Be sure to keep complete records and consult with a tax professional if your situation is complex or if you have questions about specific medical costs.
Understanding what medical expenses are deductible on your New York State return empowers you to plan strategically and reduce your overall tax burden—legally and effectively.
