Are Medical Expenses Tax Deductible?

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There’s nothing fun about medical bills or the reason you have them. The debt that often results can create financial strain — even for people with savings earmarked for extra expenses. Tax relief can offset these costs by lowering your tax burden so that you pay less income tax and keep more of your money.

Check Out: What To Do If You Owe Back Taxes to the IRS

Can You Deduct Medical Expenses From Your Taxes?

Yes, you can claim medical expenses on taxes. For tax year 2023, the IRS permits you to deduct the portion of your medical expenses that exceeds 7.5% of your adjusted gross income, or AGI.

“To take advantage of this, you must itemize your medical expense deductions on your IRS 1040,” said Danielle K. Roberts, Medicare insurance expert and co-founder of Boomer Benefits. “Make sure that the total of all itemized deductions is more than the standard deduction or it won’t benefit you.”

How To Calculate Your Tax Deduction for Medical Expenses

You can deduct the amount you spend on certain types of medical care and products when that amount is above 7.5% of your AGI. Your AGI is your income after adjustments for deductions like student loan interest, individual retirement account contributions and educator expenses.

To calculate the deduction, first calculate your adjusted gross income by completing Form 1040 or Form 1040-SR. Then enter the following information on the first four lines of Schedule A (Form 1040):

1. Add up all your medical expenses for the year, and enter the total on line 1.
2. Enter your adjusted gross income — it’s the amount shown on line 11 of your Form 1040 or 1040-SR — on line 2.
3. Multiply your AGI by 0.075, which is 7.5% (line 3). Your expenses must exceed this amount to be deductible.
4. Subtract your expenses from the product of your AGI times 0.075 to find your actual deduction, which you’ll enter on line 4.

Here’s a real-world example: Say you have an AGI of $50,000. Multiply $50,000 by 0.075 to get $3,750. You’d need over $3,750 in medical expenses to claim a deduction. With a hypothetical $6,500 in medical expenses, subtracting your $3,750 base amount from the $6,500 in expenses equals $2,750, which is your deduction if you choose to itemize rather than take the standard deduction.

What Medical Expenses Are Tax Deductible?

The IRS defines medical expenses as “the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and for the purpose of affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists and other medical practitioners. They include the costs of equipment, supplies and diagnostic devices needed for these purposes.”

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For example:

• Fees to doctors, surgeons, dentists, chiropractors, psychiatrists, psychologists and other providers of professional services
• Laboratory fees that are part of medical care
• Medical insurance premiums beyond the portion your employer pays and that you pay with after-tax income
• Long-term care and long-term care insurance premiums, up to certain limits
• Inpatient alcohol and drug treatment programs
• Ambulance service
• Dental services like dentures, fillings and braces
• Weight loss programs for a specific disease diagnosed by a physician
• Modifications, like wheelchair ramps, to your home for medical care
• Equipment and supplies, such as breast pumps, for nursing mothers
• Insulin and prescription drugs
• Medical equipment and supplies like glasses, contacts, hearing aids, crutches and similar medical devices
• Guide dog or other service animal
• Cosmetic surgery required due to a disease or accident
• Removing lead-based paint from a damaged surface within the reach of a child who has or has had lead poisoning
• Costs of attending a conference concerning a chronic condition of yours, your spouse’s or your dependent’s
• Stop-smoking programs, but not nonprescription drugs like nicotine gum or patches
• Out-of-pocket expenses, such as gas and oil, when you use a car for medical reasons

For a complete list of deductible medical expenses, check IRS Publication 502.

Expenses That Don’t Count as Tax Deductions

Of course, not every expense you see as medically related is one that the IRS would agree with. You can’t include medical expenses for which you were reimbursed or that were paid directly to the hospital or doctor, for example. Here’s a partial list of other expenses that won’t qualify, according to the IRS:

• Funeral expenses
• Most cosmetic surgery
• Travel that a doctor recommended for rest or a change
• Illegal treatments or substances
• Diet food expenses
• Nonprescription drugs except insulin
• Nicotine patches or gum
• Teeth whitening
• Dancing lessons
• Swimming lessons

What Are Other Tax-Advantaged Ways To Deal With Medical Expenses?

Unfortunately, not everyone will be able to itemize their medical expenses. But there are other tax-advantaged options that can help you save on these costs. Here are a few to consider.

Health Savings Account

An HSA is a type of savings account that allows you to set aside pretax funds to pay for qualifying medical costs. You can only contribute to an HSA if you have an eligible high-deductible health plan.

HSA contributions that are unused at the end of the year automatically roll over to the next year, which allows you to build up your balance for future medical expenses.

Flexible Spending Account

An FSA is an account that you — and possibly your employer — put pretax funds into to pay for qualifying medical and dental expenses for you, your spouse and any dependents.

In general, you must use the funds in your FSA within the year, but your employer has the option to provide you with a grace period of up to 2 1/2 additional months or allow you to carry over up to $640 in unused funds to the following year.

Health Reimbursement Arrangement

An HRA is a group health plan funded by an employer. Employees receive tax-free reimbursements for qualified medical expenses up to a preset dollar amount each year. One advantage of this type of account is that unused dollar amounts can be rolled over for use in future years.

Is It Worth Claiming Medical Expenses on Taxes?

Although writing off medical expenses as deductions could make for a healthier bottom line on your tax return, the standard deduction might make more sense for you. In either case, you can also look into other tax-advantaged ways to pay medical bills, such as health savings accounts, flexible spending accounts and health reimbursement arrangements — solutions that could shoulder at least part of the financial burden.

Daria Uhlig, Cynthia Measom, Cody Bay and Michael Keenan contributed to the reporting for this article.

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