Overview
Claiming medical expenses can reduce your taxable income when you itemize deductions on Schedule A (Form 1040). The IRS allows taxpayers to deduct unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income (AGI) for the tax year. That threshold means only the portion above 7.5% of AGI is deductible. For many taxpayers, careful recordkeeping and a year‑end review determine whether itemizing — rather than taking the standard deduction — makes sense.
(See IRS Publication 502 for an authoritative list of qualifying and non‑qualifying items: https://www.irs.gov/pub/irs‑pdf/p502.pdf.)
Who can claim medical expenses?
You can include medical costs you paid for:
- Yourself and your spouse.
- Your qualifying dependents.
- People you could have claimed as a dependent but didn’t because of filing rules (check Pub 502 for specifics).
Medical expenses must generally be unreimbursed; if you were reimbursed (for example, by an employer’s plan, an HSA distribution tied to the expense, or another insurer), you cannot deduct that portion again.
What counts as a qualifying medical expense?
The IRS definition is broader than many taxpayers think. Typical qualifying expenses include:
- Payments to doctors, dentists, surgeons, chiropractors, psychiatrists, and similar medical providers.
- Prescription medications and insulin.
- Medical equipment (wheelchairs, crutches, hearing aids, eyeglasses by prescription).
- Long‑term care expenses and certain nursing home costs when primarily for medical care.
- Health insurance premiums you paid with after‑tax dollars (exceptions apply for self‑employed taxpayers—see below).
- Payments for transportation primarily for and essential to medical care (mileage or actual costs) and lodging costs in limited circumstances.
- Dental and vision care, including necessary orthodontia and prescribed contact lenses.
Examples that usually do NOT qualify:
- Cosmetic surgery (unless it is necessary to improve a deformity from an injury, disease, or congenital defect).
- General health items (gym memberships, vitamins) unless prescribed for a specific medical condition and supported by documentation.
- Over‑the‑counter drugs are usually not deductible unless prescribed by a physician.
These lists are not exhaustive. Always cross‑check with IRS Publication 502 to confirm eligibility for a specific expense.
How the deduction works (simple calculation)
- Add up all qualifying unreimbursed medical expenses you paid during the tax year.
- Calculate 7.5% of your AGI.
- Subtract that threshold from your total medical expenses. The remainder is the deductible amount you report on Schedule A.
Example: AGI = $50,000. Threshold = 7.5% × $50,000 = $3,750. If unreimbursed medical expenses = $5,000, deductible amount = $5,000 − $3,750 = $1,250.
Important rules and exceptions
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Itemize vs. standard deduction: Medical expenses are deductible only if you itemize on Schedule A. If your total itemized deductions (including mortgage interest, charitable gifts, state and local taxes, etc.) are less than the standard deduction, you’ll typically take the standard deduction instead. See our guide on When to Itemize for decision rules and examples.
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Health Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs): Expenses reimbursed through these accounts are not deductible. Conversely, HSA contributions for self‑employed or otherwise eligible taxpayers can reduce taxable income in other ways (see IRS guidance and your tax advisor).
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Self‑employed taxpayers: If you’re self‑employed and meet the requirements, you may be able to deduct health insurance premiums as an adjustment to income (above the line) rather than an itemized medical expense. That deduction has its own rules—check IRS guidance or consult a tax professional.
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Dependents: You can claim qualifying medical expenses for dependents you list on your return. In many cases you can also claim expenses you paid for someone you could have claimed as a dependent even if you didn’t actually claim them.
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Timing: Only expenses paid during the tax year count for that year. If you prepay or delay elective procedures to move expenses into a year when they’ll help you itemize, this is called “bunching” — a legitimate year‑end planning technique (see our piece on How to Bunch Medical Expenses to Itemize).
Travel, transportation and lodging
Transportation costs primarily for medical care are deductible. That can include:
- Car mileage (the IRS allows a standard medical mileage rate or actual cost method — check the current rate listed by the IRS each year).
- Parking fees and tolls for medical visits.
- Bus, taxi, train, or ambulance fares.
Lodging while away from home for medical care may be deductible in limited circumstances (for example, when treatment requires an overnight stay and no medical facility is available locally); strict rules apply. Keep receipts and written proof that the travel and lodging were primarily for, and essential to, medical care.
(See IRS Pub 502 for detailed rules on transportation and lodging.)
Recordkeeping: how to track medical expenses effectively
Good documentation turns otherwise overlooked costs into real tax savings. Adopt a system that is simple, consistent, and defensible in case of IRS questions.
- Centralize records
- Use a dedicated folder (physical or digital) labeled “Medical Expenses — [Year].”
- Keep EOBs (explanation of benefits), receipts, invoices, cancelled checks, credit‑card statements, and HSA/FSA statements.
- Track monthly and categorize
- Maintain a spreadsheet or use an expense tracker app. Recommended categories: provider visits, dental, vision, prescriptions, medical equipment, mileage/transportation, lodging, insurance premiums, long‑term care.
- Record date paid, payee, purpose of expense, amount paid, and whether any portion was reimbursed.
- Save supporting documentation
- For each entry keep supporting documentation: itemized receipts, letters from providers (for medical necessity), prescriptions, HSA/FSA reimbursement documentation, and proof of payment.
- Reconcile before filing
- Late January is a good time to reconcile the prior year’s medical expenses when you receive year‑end statements from medical providers and insurers.
- Use software features
- Many personal finance apps let you tag and export medical‑expense reports. If you keep digital copies, store them in a secure cloud folder with a naming convention (e.g., 2025‑MM‑DDPatientNameProvider_Purpose.pdf).
Professional tip from practice: I advise clients to run a quick “medical expense” report in December. Small planned moves — scheduling a necessary elective procedure, filling prescriptions, or prepaying a deductible — can push a year’s expenses over the 7.5% threshold and change whether it makes sense to itemize.
Common mistakes to avoid
- Missing small recurring costs: co‑pays, over‑the‑counter prescriptions (when they are prescribed), and dental expenses add up and are often forgotten.
- Counting reimbursed expenses: don’t include items you were reimbursed for.
- Poor documentation: vague receipts or missing dates make the deduction hard to support.
- Assuming all health‑related spending qualifies: fitness programs, vitamins, and cosmetic treatments are usually not deductible.
Bunching and year‑end planning
If your medical expenses are near the 7.5% threshold, consider bunching: time discretionary medical work or fill prescriptions such that multiple expensive items fall into one tax year. This strategy is covered in our How to Bunch Medical Expenses to Itemize guide and relates closely to broader itemizing strategies (see When to Itemize and Schedule A (Itemized Deductions)).
Useful internal resources:
- How to Bunch Medical Expenses to Itemize: https://finhelp.io/glossary/how-to-bunch-medical-expenses-to-itemize/
- Schedule A (Itemized Deductions): https://finhelp.io/glossary/schedule-a-itemized-deductions/
- When to Itemize: Decision Rules and Quick Calculators: https://finhelp.io/glossary/when-to-itemize-decision-rules-and-quick-calculators/
State tax differences
State tax treatment of medical expenses varies. Some states follow federal rules, others have different thresholds or disallow certain deductions. Check your state tax guidance or consult a tax preparer familiar with state conformity issues.
Example case studies
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Married couple, AGI $80,000, substantial child medical bills: By documenting surgery costs, travel, and physical therapy, their unreimbursed expenses exceeded the 7.5% threshold and lowered taxable income significantly.
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Single filer, AGI $50,000: $5,000 in unreimbursed medical costs produced a $1,250 deduction after subtracting the $3,750 threshold (7.5% × AGI).
These examples show why tracking and reconciling all possible qualifying costs matter.
When to consult a tax professional
If you have complex situations — high unreimbursed expenses, long‑term care, non‑standard insurance arrangements, significant reimbursements, or business‑owner insurance issues — consult a qualified tax professional. Tax rules intersect with health‑care law and state rules; personalized advice prevents costly errors.
Sources and further reading
- IRS Publication 502, Medical and Dental Expenses: https://www.irs.gov/pub/irs‑pdf/p502.pdf
- IRS Topic and instructions for Schedule A (see Form 1040 instructions)
- FinHelp guides: How to Bunch Medical Expenses to Itemize; Schedule A (Itemized Deductions); When to Itemize — linked above.
Professional disclaimer: This article is educational and does not constitute individualized tax advice. Rules change and state law varies. For help tailored to your situation, consult a licensed tax professional or CPA.
