Medical expenses can quickly put a strain on your budget, whether you’re paying for doctor’s visits, prescription drugs or an unexpected surgery. If you had significant out-of-pocket health care costs during the year, the IRS may allow you to deduct some of those expenses on your federal tax return. The medical expense deduction is only available for qualified unreimbursed expenses that exceed 7.5% of your adjusted gross income (AGI). You will also need to itemize your deductions instead of claiming the standard deduction.
Below, we’ll explain who qualifies, which medical expenses are deductible and how to determine if itemization can lower your tax bill.
What is the tax relief for medical expenses?
The medical expense tax deduction allows eligible taxpayers to deduct certain unreimbursed health care costs from their taxable income. You claim the deduction on Schedule A (itemized deductions) when you file your federal tax return.
Unlike tax credits, which reduce your tax bill dollar for dollar, the medical expense deduction reduces your taxable income. The amount you save depends on your tax bracket and the total value of your itemized deductions.
General Tax-Deductible Medical Costs
The IRS lets you deduct medical expenses that were not covered by insurance, even if your insurance provider paid your medical provider directly or sent you a reimbursement.
Qualifying costs may include any payments you make for the diagnosis, mitigation, treatment, cure or prevention of a disease. Here are some common tax-deductible medical costs.
doctor and hospital expenses
- doctor visit
- Surgeries and Procedures
- stays in hospital
- expert care
- emergency room care
- clinical trials
Prescription Medicines
- prescription drugs
- insulin
dental and vision care
- dental treatment
- oral surgery
- Glasses
- contact lenses
- eye examination
health insurance premium
Health insurance premiums may qualify if you pay them out of pocket. This includes some Medicare, Marketplace health insurance, and COBRA premiums. Medicare premiums deducted directly from your Social Security benefits also qualify for tax relief.
Improving medical equipment and access
- wheelchair
- hearing aids
- prostheses
- some home modifications, such as ramps or stair lifts
Expenses that generally do not qualify
Not all health-related costs are eligible for tax relief. Some non-deductible expenses include:
- Cosmetic procedures that are not medically necessary
- non-prescription drugs
- general health club or gym memberships
- Most Vitamins and Dietary Supplements
- funeral or burial expenses
Who can claim medical expenses?
You may qualify for the medical expense deduction if you meet all of the following requirements:
- Your qualified, unreimbursed medical expenses exceed 7.5% of your adjusted gross income (AGI).
- You itemize deductions on Schedule A instead of claiming the standard deduction.
- Expenses were paid for you, your spouse, or a qualifying dependent and were not reimbursed through insurance, health savings account (HSA), flexible spending account (FSA) or any other source.
For example, if your AGI is $100,000, the first $7,500 of qualified medical expenses are not deductible. If you paid $10,000 in eligible nonreimbursable medical costs, you can deduct $2,500, which is the amount above the 7.5% limit.
Dependents are defined as qualifying children or relatives who depend on you for financial support. If you have children, they are considered dependents until they are 19 or 24 if they are a full-time student.
Are medical expenses deductible for parents?
If your parent qualifies as a dependent you can claim medical expenses paid on behalf of the parent. Your parents must:
- Get more than half of their financial aid from you
- have a gross income of less than $5,050
The IRS requires certain dependents to live with you throughout the year, but it provides an exception for direct relatives such as parents.
There is no specific dollar limit on how much you can claim for a parent’s medical expenses. This is subject to normal Medicare deductible rules.
What’s the most overlooked tax break?
Although surgery and prescription costs are easy to identify, there are some other eligible medical costs that may not be so obvious.
“The mileage on commuting to appointments is usually lost,” says Chad Gammon, Certified Financial Planner, Enrolled Agent and owner of Custom Fit Financial. “You can also deduct any parking fees or tolls for getting to appointments.”
The current IRS medical mileage rate is 21 cents per mile. Here are some other commonly overlooked costs that you can include when claiming tax relief for medical expenses:
- Long-term care expenses: These may include assisted living or nursing care costs that were not reimbursed by insurance.
- Medicare premiums: If you paid premiums for Medicare Parts B, C and D Medicare Supplement (Medigap), you may be able to deduct these costs.
- Medical expenses for qualifying dependents: You can often deduct medical costs paid on behalf of your dependents, including adult children or elderly parents who qualify as dependents.
Remembering to include these often overlooked payments can help you overcome the 7.5% AGI threshold for medical expense tax relief.
Does income affect the medical expense deduction?
Unlike some tax exemptions and credits, the medical expense deduction does not have a minimum or maximum income limit. Instead, eligibility depends on how much you spend on qualified unreimbursed medical expenses relative to your AGI.
Because only expenses over 7.5% of your AGI are deductible, lower income taxpayers can reach the limit with smaller medical bills than higher income taxpayers.
For example, someone with an AGI of $40,000 can start claiming the deduction after paying more than $3,000 in qualified medical expenses. A taxpayer with an AGI of $150,000 will not qualify unless qualified expenses exceed $11,250.
Although income in itself does not determine eligibility, it does affect how much you must spend on health care before the deduction is available.
Should you itemize your deductions?
Even if you qualify for the medical expense deduction, itemizing only makes sense if your total itemized deductions exceed the standard deduction for your filing status.
Taxpayers with unusually high health care costs – such as those managing a chronic illness, recovering from a major procedure or supporting a family member with significant medical needs – may find that their combined itemized deductions exceed the standard deduction, making itemization a more beneficial option.
In addition to medical expenses, itemized deductions may include mortgage interest, certain state and local taxes, and charitable contributions.
Steps to Claim Medical Expenses Tax Relief
If the medical expenses tax deduction is appropriate for your situation, you can take these steps to claim it:
- Step 1: Gather Your Documents. This may include medical bills, pharmacy receipts, payment records (such as bank or credit card statements) and insurance statements that show costs that were not reimbursed.
- Step 2: Calculate your eligible expenses. When adding up your eligible medical expenses, remove any costs reimbursed by insurance.
- Step 3: Enforce AGI Limits. Figure out what 7.5% of your AGI is. Then subtract that amount from your total eligible expenses. The difference is how much you can claim as a deduction.
- Step 4: List your deductions on Schedule A. On this form, you can claim your medical expenses above the 7.5% limit, along with state taxes, mortgage interest, and charitable donations.
If your total itemized deductions are less than the standard deduction, it probably doesn’t make sense to itemize and claim the medical deduction. In this case, you’ll save more money by skipping the medical deduction and claiming the standard deduction instead.
When to seek business tax help
If your situation is relatively straightforward, you may be comfortable navigating the medical expense deduction yourself. But taxpayers with more complex situations may benefit from professional tax assistance.
For example, working with a tax expert may be helpful in cases that include:
- major surgeries or other medical events
- Complex family situations where dependency status is unclear
- supporting elderly parents
- long-term care or nursing home expenses
- Large itemized deductions across multiple categories
- Mixed insurance reimbursement and out-of-pocket expenses
“It might be good to have a second set of eyes to look at your situation,” says Gammon. “This can be tricky if you’re self-employed or a business owner or if you have multi-state residency. Other major life events like divorce, retirement or inheritance can also throw up some wrinkles.”
A qualified tax professional can help you navigate complex situations and help ensure you are correctly following IRS rules. They can help you maximize your medical tax deduction without claiming extra on your taxes.
ground level
The IRS offers tax relief for medical expenses, but strict eligibility requirements apply. You can only claim eligible medical costs that were not reimbursed for by insurance and that exceed 7.5% of your adjusted gross income. Also, you must itemize instead of claiming the standard deduction.
Routine health care costs in themselves may not qualify, but you are more likely to qualify if you paid for significant medical events for yourself, your spouse or your dependents. Low-income borrowers will have to exceed the threshold less than higher-income borrowers, because their medical costs may make up a higher proportion of their wages.
Like most tax relief programs, benefits depend largely on your individual financial situation. By evaluating your income and qualifying expenses – or hiring a tax professional in more complex situations – you can decide whether the medical expense deduction is worthwhile for you.
FAQs about Medical Expense Tax Relief
What is the IRS rule on medical expenses?The IRS lets you deduct qualified, nonreimbursable medical expenses that exceed 7.5% of your adjusted gross income, but only if you itemize rather than taking the standard deduction. You can deduct qualified medical costs paid for yourself, your spouse or your dependents.
Is it appropriate to claim medical expenses on taxes?If your itemized deductions exceed the standard deduction, it may be worth claiming the medical expense on your taxes. Your itemized deduction may be higher if you paid a lot for medical costs, state or local taxes, mortgage interest or donations.
Can I claim my parents’ medical expenses?You can claim your parent’s qualified medical expenses if your parent qualifies as a dependent under IRS rules. If your parents have a gross income of less than $5,050 and receive more than half of their financial aid from you, they may be eligible.
What is the maximum deduction for parents’ medical expenses?There is no maximum deduction for a parent’s medical expenses, but you can only claim qualified expenses that exceed 7.5% of your AGI. Additionally, you must file your taxes and your parents must qualify as dependents under IRS guidelines.
Which medical expenses are not deductible?Non-deductible medical expenses include voluntary cosmetic procedures, gym memberships, non-prescription supplements, and other personal health costs that are not medically necessary or prescribed by a doctor.
Reporting by Rebecca Safier, special to USA TODAY/USA TODAY Network via Reuters Connect.