Can You Deduct Medical Expenses on Your Taxes? A Complete Guide

Whether you can deduct medical expenses on your taxes depends on several important factors, and understanding these rules can help you potentially recover some of your healthcare costs. The IRS allows eligible taxpayers to claim qualifying medical and dental expenses, but only when specific conditions are met. Let’s walk through what qualifies, how to calculate your potential deduction, and whether it makes sense for your financial situation.

Understanding Medical Deductions: The IRS Definition

The IRS considers medical expenses to be costs associated with the “diagnosis, cure, mitigation, treatment, or prevention” of disease or injury. This goes beyond just visits to doctors—it includes a broad range of healthcare-related spending.

Qualifying medical expenses encompass payments to physicians, surgeons, dentists, psychiatrists, and other licensed practitioners. They also include prescription medications and insulin, laboratory tests and diagnostic imaging like X-rays, optical devices such as glasses and contact lenses, and various forms of care including nursing assistance and hospital stays. The IRS definition is quite comprehensive, covering legitimate healthcare needs rather than general wellness products.

The 7.5% AGI Threshold: How Deductions Are Calculated

Here’s a critical detail: you can only deduct medical expenses that exceed 7.5% of your Adjusted Gross Income (AGI). This threshold has been in place since 2017, when it was established by the Tax Cuts and Jobs Act, and the Consolidated Appropriations Act of 2021 made this 7.5% rate permanent.

Understanding the math is essential. If your AGI is $50,000, your threshold would be $3,750 ($50,000 × 7.5%). Only medical expenses beyond this amount can be deducted. For example, if your total qualifying medical expenses are $6,000, you can only deduct $2,250 ($6,000 minus the $3,750 threshold).

This structure means that most people won’t have significant deductible medical expenses unless they faced major healthcare costs during the year. The threshold acts as a filter, ensuring only substantial expenses provide tax relief.

What Medical Costs Qualify for Tax Deductions

A surprisingly wide range of healthcare expenses can qualify. Beyond standard doctor visits and hospital stays, the IRS allows you to deduct:

• Professional medical services from doctors, surgeons, dentists, chiropractors, psychiatrists, and psychologists
• Health insurance premiums and long-term care insurance (if you itemize)
• In-home nursing care and hospital stays
• Treatment programs for substance abuse
• Acupuncture and other alternative treatments (when treating a diagnosed condition)
• Reproductive healthcare including fertility treatments and contraception
• Hearing aids, prescription eyeglasses, contact lenses, wheelchairs, crutches, and guide dogs
• Smoking cessation programs and related prescription medications
• Weight loss programs prescribed by a doctor for a diagnosed medical condition
• Prescribed insulin and other necessary prescription drugs
• Transportation to medical facilities, including mileage (at the IRS-approved rate), taxi, and ambulance services
• Medical conference registration and travel related to a chronic illness affecting you or a dependent

The key requirement is that expenses must be genuinely medical in nature and documented.

Expenses That Don’t Qualify: What You Can’t Deduct

Just as important is knowing what the IRS won’t allow. Common expenses that aren’t deductible include:

• Funeral and burial costs
• Over-the-counter medications (without a prescription)
• General toiletries, toothpaste, and cosmetics
• Cosmetic surgery and related procedures
• Nicotine patches or gum available without prescription
• General health improvement programs like gym memberships
• Maternity clothing
• Babysitting or childcare
• Household help, even if medically recommended
• Nutritional supplements and vitamins
• Meals and lodging while attending medical conferences
• Any expenses already reimbursed by insurance or your employer

Additionally, you cannot deduct your employer’s share of health insurance premiums, and any expense you’re already reimbursed for—whether through insurance or employer programs—is ineligible.

Itemizing vs. Standard Deduction: Making Your Decision

Here’s where many people make a critical error: claiming medical expense deductions requires that you itemize your deductions rather than take the standard deduction. This is a major consideration.

The Tax Cuts and Jobs Act significantly increased the standard deduction, which means fewer taxpayers benefit from itemizing. For the current tax environment, standard deductions are substantial, and your combined itemized deductions must exceed your standard deduction for itemizing to be worthwhile.

To determine whether deducting medical expenses makes sense, you need to total all your potential itemized deductions (medical expenses, state and local taxes, mortgage interest, charitable contributions, etc.) and compare this total to your standard deduction. If your itemized deductions don’t exceed the standard deduction, you’re better off taking the simpler standard deduction option rather than itemizing.

Many taxpayers discover that even with significant medical expenses, their standard deduction provides more tax relief. Run the numbers before committing to itemizing.

Steps to Claim Your Medical Expense Deductions

If you’ve determined that itemizing is beneficial and you have qualifying medical expenses exceeding 7.5% of your AGI, here’s how to proceed:

Gather documentation for all medical expenses paid during the tax year. This includes receipts, bills, insurance statements showing out-of-pocket costs, and mileage logs for medical travel.

Calculate your total qualifying medical expenses for the year. Subtract 7.5% of your AGI from this total—only the remainder is deductible.

Complete IRS Form 1040 and Schedule A, which is where itemized deductions are detailed. Schedule A specifically requires you to list and substantiate all medical and dental expenses you’re claiming.

Keep all supporting documentation organized and accessible. The IRS may request verification of substantial deductions, so maintain records for at least three years.

Consider consulting a tax professional, especially if your situation is complex or your medical expenses are substantial. Professional guidance can ensure you’re maximizing legitimate deductions while staying compliant with current tax law.