How deductible medical expenses work
Deductible medical expenses are a category of itemized deductions on Schedule A (Form 1040) that reduce your taxable income. The core rule: you may deduct only the amount of your total qualifying medical and dental expenses that exceeds 7.5% of your adjusted gross income (AGI) for the year (IRS Publication 502; Topic No. 502). That means you first add up all qualifying expenses, compute 7.5% of your AGI, then subtract that threshold from your total. The remainder — if any — is the deductible amount.
Most individual taxpayers use the cash‑basis approach: expenses are deductible in the year paid, not the year billed (IRS Pub. 502). If you received reimbursement (from insurance, a court award, or an employer), you must reduce your medical expenses by the amount reimbursed.
What qualifies as a medical expense
Qualifying expenses are those paid for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part or function of the body. Common qualifying items include:
- Doctor, surgeon, dentist, and specialist fees
- Prescription medications and insulin
- Hospital services and inpatient care
- Diagnostic tests and lab work
- Medical equipment and supplies (crutches, braces, etc.)
- Mental health care, including counseling when medically necessary
- Dental and vision care (including eyeglasses and contact lenses)
- Transportation primarily for and essential to medical care (see below)
- Long‑term care premiums and certain long‑term care services (subject to limits)
Refer to IRS Publication 502 for a comprehensive list and examples (IRS Pub. 502).
What does NOT qualify
Non‑qualifying items include purely cosmetic procedures that are not medically necessary; general health items (most over‑the‑counter vitamins and supplements); gym memberships (unless prescribed for a specific medical condition and documented), and everyday personal care. Also, expenses you claim as business deductions or that are reimbursed are not deductible here.
Transportation and travel costs
You may deduct transportation costs for medical care — either actual expenses (parking, tolls, fares) or the IRS medical mileage allowance — plus lodging in limited circumstances (e.g., when travel is primarily for and essential to medical care) (IRS Pub. 502). Keep detailed logs or receipts. For best practices on mileage documentation and recordkeeping, see FinHelp’s guide on documenting vehicle use: “How to Document Miles and Vehicle Use for Tax Deductions.” (internal link)
How to calculate your deductible amount (step‑by‑step)
- Total all qualifying medical expenses you (and your spouse, if filing jointly) paid during the tax year.
- Determine your AGI from your tax return (Form 1040).
- Multiply AGI by 7.5% to get the threshold.
- Subtract the threshold from your total qualifying expenses.
- If the result is positive, that amount goes on Schedule A as the medical expenses deduction. If it’s zero or negative, you don’t get a deduction.
Example: If your AGI is $80,000, the 7.5% threshold is $6,000. If you paid $12,000 in qualifying medical expenses, you can deduct $12,000 − $6,000 = $6,000 on Schedule A.
Common real‑world situations where medical deductions help
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Chronic illness: When ongoing therapy, prescriptions, and specialist visits accumulate, expenses can quickly exceed the 7.5% AGI threshold. In my practice I’ve seen middle‑income households that only realized a tax benefit after consolidating a calendar year of bills and insurance outlays.
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Major procedures: A single expensive surgery or series of hospital stays can push you past the threshold in the year paid.
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Long‑term care and aging: Seniors with substantial long‑term care costs or age‑based LTC insurance premiums can qualify for meaningful deductions — though rules and limits apply (IRS Pub. 502).
Practical strategies to maximize deductibility
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Bunching and timing: If your medical expenses are near the threshold, coordinate timing with your provider and insurer. Prepaying deductible medical bills or elective procedures before year‑end (when medically appropriate) can move more costs into a single tax year and increase the chance you’ll exceed 7.5% of AGI.
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Use tax‑advantaged accounts properly:
- Health Savings Accounts (HSAs): Contributions are tax‑deductible (or pre‑tax through payroll), grow tax‑free, and withdrawals for qualified medical expenses are tax‑free. HSAs reduce taxable income up front and cover many costs that might otherwise be itemized. See FinHelp’s HSA coverage: “Health Savings Account (HSA)” and “How Health Savings Accounts Work with High‑Deductible Plans.” (internal links)
- Flexible Spending Accounts (FSAs): FSAs let you pay eligible medical expenses with pre‑tax dollars, lowering your taxable wages. Note use‑it‑or‑lose‑it rules and plan deadlines.
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Coordinate with insurance: Keep records of Explanation of Benefits (EOBs) and note what was reimbursed. Only unreimbursed costs are deductible.
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Include dependents’ expenses: You can include qualifying medical expenses you paid for your spouse and dependents. For blended or divorced households, clarify who actually paid the expense when deciding who may claim it.
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Track transportation: Deduct eligible travel to and from medical care. Use logs and receipts in addition to mileage calculations (see internal guide on vehicle documentation).
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Consider state tax rules: Some states have different thresholds or allow other medical credits/deductions. Check your state tax department guidance or consult a tax professional.
Documentation and recordkeeping
Good records make the difference at audit time. Keep:
- Receipts, itemized bills, and Explanation of Benefits (EOBs)
- Canceled checks or bank/credit card statements showing payments
- Prescriptions and provider notes when the purpose of treatment may be questioned
- Mileage logs, toll receipts, or transportation bills for travel to medical care
IRS guidance states you should retain records that show the amount of the medical expense, the date, and the medical reason if not obvious (IRS Pub. 502).
Common mistakes to avoid
- Claiming unreimbursed expenses that were actually paid by insurance later.
- Forgetting to include children’s or dependent‑care medical costs you paid.
- Listing non‑qualifying items such as general health supplements or cosmetic procedures.
- Ignoring the cash‑basis rule — most individual taxpayers deduct expenses in the year paid.
When itemizing is worth it
Deciding whether to itemize depends on whether your total itemized deductions (including medical expenses after applying the 7.5% AGI rule, mortgage interest, charitable gifts, and state/local taxes where allowed) exceed the standard deduction. Because standard deduction amounts change annually, check current figures and compare totals — see FinHelp’s coverage: “Standard Deduction vs. Itemized Deductions.” (internal link)
In my advisory work, I run simple side‑by‑side comparisons — a quick spreadsheet adding Schedule A categories for the year — to test whether itemizing delivers a meaningful tax benefit.
When to consult a pro
If you have unusually large or complicated medical expenses (e.g., long‑term care, cross‑border care, substantial unreimbursed costs for dependents), discuss your situation with a tax professional. A preparer can help with timing strategies, coordinate HSA/FSA benefits, and ensure you properly document deductions.
Next steps — a practical checklist
- Gather all medical receipts, EOBs, and payment records for the year.
- Add up qualifying expenses and calculate 7.5% of your AGI.
- Compare the potential Schedule A deduction to the standard deduction.
- Review HSA/FSA activity and reimbursements.
- Consult a tax preparer if you’re near the threshold or have complex claims.
Authoritative sources and further reading
- IRS Publication 502, Medical and Dental Expenses (IRS Pub. 502).
- IRS Topic No. 502, Medical and Dental Expenses (irs.gov).
- For itemizing decisions, see FinHelp’s article: “Standard Deduction vs. Itemized Deductions.” (internal link)
- For HSAs and planning, see FinHelp’s “Health Savings Account (HSA)” glossary pages. (internal links)
- For mileage recordkeeping, see FinHelp’s “How to Document Miles and Vehicle Use for Tax Deductions.” (internal link)
Professional disclaimer: This article is educational and informational only and does not constitute tax, legal, or financial advice tailored to your circumstances. Consult a qualified tax professional or CPA for guidance specific to your situation.
(Updated 2025. For the most current IRS rules and standard deduction amounts, consult IRS.gov and the linked FinHelp resources.)
