How to Bunch Medical Expenses to Itemize

How can you bunch medical expenses to maximize tax deductions?

Bunching medical expenses is a practical planning technique: time and group deductible medical payments so that total qualifying expenses in one tax year exceed 7.5% of your Adjusted Gross Income (AGI). Once you pass that threshold, the excess can be reported on Schedule A as an itemized deduction, potentially reducing your federal tax bill (IRS Topic No. 502) [https://www.irs.gov/taxtopics/tc502].

Below is a clear, step‑by‑step guide that explains what counts, how to calculate the break‑even point, realistic tactics to bunch costs, recordkeeping rules, interactions with HSAs/FSAs, and common mistakes to avoid.

Who should consider bunching medical expenses?

• Households whose typical medical spending is close to 7.5% of AGI (for example, recurring prescriptions, dental work, or predictable treatments).
• Families expecting a one‑time or elective procedure (e.g., cataract surgery, certain dental work, or LASIK if it qualifies).
• People with variable bills who can control timing for non‑emergency treatments.

If your itemized deductions normally don’t exceed the standard deduction, but you expect a cluster of health costs in one year, bunching can move you from the standard deduction to itemizing.

What medical expenses qualify?

The IRS allows many out‑of‑pocket costs as medical expenses when you itemize. Typical deductible items include:

• Doctor, dentist, and surgeon fees
• Prescription medications and insulin
• Medicare and other health insurance premiums (when paid with after‑tax dollars), including Medicare Part B and D premiums
• Long‑term care premiums and certain long‑term care services (subject to age‑based limits)
• Dental and vision care (glasses, contact lenses, dental work)
• Medical aids (hearing aids, wheelchairs, crutches)
• Transportation primarily for medical care (mileage, parking, tolls — see IRS Publication 463 for current rules)

Common non‑deductible items: cosmetic procedures that are not medically necessary, most over‑the‑counter medicines, general wellness club fees, and expenses reimbursed through insurance or a tax‑advantaged plan. For full details refer to IRS Topic No. 502.

Quick math: how to calculate your deductible medical expense

1. Calculate your AGI (Adjusted Gross Income) from your Form 1040.
2. Multiply AGI by 7.5% (0.075). That is the floor for deducting medical costs.
3. Add up your eligible medical expenses paid during the tax year.
4. Subtract the floor (step 2) from your total medical expenses. The remainder (if positive) is the amount you can report on Schedule A.

Example:

• AGI = $60,000 → 7.5% floor = $4,500
• Medical expenses in 2025 if unbunched = $4,200 → No deduction (below floor)
• If you can shift $600 of planned care into the same year, total = $4,800 → Deductible amount = $300 (4,800 − 4,500)

This shows how relatively modest timing changes can convert expenses from nondeductible to deductible.

Practical bunching strategies

1. Inventory and forecast

• Track last 12 months of medical costs (EOBs, receipts, statements). Identify predictable and discretionary items you can shift.

1. Schedule and prepay where appropriate

• If you have elective but medically appropriate procedures coming up, schedule them in the same calendar year as other predictable expenses. Some providers will accept deposits or allow you to prepay — confirmation of payment date is what matters for the deduction.

1. Consolidate dental/vision work

• Dental crowns, root canals, dentures, and vision procedures are often large expenses that are easy to bunch into one tax year.

1. Coordinate with dependents and household members

• Medical expenses for you, your spouse, and your dependents count toward the same threshold. Consolidating family care in one year increases the chance of exceeding 7.5% of household AGI.

1. Use out‑of‑pocket payments rather than tax‑advantaged reimbursements when appropriate

• Do not count expenses reimbursed by an HSA/FSA as deductible. At the same time, contributing to an HSA reduces AGI, which lowers the 7.5% floor—this can help or complicate planning. Example: a lower AGI means the 7.5% threshold is smaller, but an HSA reimbursement reduces the pool of deductible expenses because those payments are not eligible for a deduction. Coordinate with a tax advisor.

1. Consider timing of insurance premiums

• Some premiums (for example, certain long‑term care or Medicare premiums paid out‑of‑pocket) are deductible if not pre‑tax or reimbursed. If you can, pay them in the year that maximizes your total medical outlays.

1. Don’t borrow to create a deduction

• Avoid taking loans or using credit purely to create a deduction. Interest or loan fees are not deductible as medical expenses and the financial risk usually outweighs tax savings.

Documentation: what to keep

• Itemized receipts and paid invoices showing amounts and dates
• Explanation of Benefits (EOBs) from insurers
• Canceled checks, credit‑card statements, bank records showing the payment date
• A written statement from providers for unusual charges or to support medical necessity (if needed)

IRS audits often focus on proof of payment and whether the expense is truly medical. Keep records for at least three years, and longer if you file amended returns.

Interaction with other tax rules

• Standard deduction vs. itemizing: If, after bunching, your total itemized deductions exceed the standard deduction, use Schedule A. See our guide “When It Pays to Itemize: A Year‑Round Planner” for broader itemizing decisions.

• Internal link: When It Pays to Itemize: A Year‑Round Planner — https://finhelp.io/glossary/when-it-pays-to-itemize-a-year-round-planner/

• Schedule A: After verifying your deductible medical amount, enter it on Schedule A under medical and dental expenses. For details on filling out Schedule A, see our glossary page “Schedule A (Itemized Deductions).”

• Internal link: Schedule A (Itemized Deductions) — https://finhelp.io/glossary/schedule-a-itemized-deductions/

• HSA/FSA and pre-tax benefits: Money used from HSAs, FSAs, or employer plans cannot be deducted later. HSA contributions reduce AGI; losing those pre-tax contributions to increase an itemized deduction is rarely optimal without modeling the results.

Common mistakes and pitfalls

• Scattering expenses: Splitting major procedures across two calendar years frequently removes any deduction.
• Counting reimbursed costs: If insurance or a tax-advantaged account paid the bill, you cannot deduct that expense.
• Neglecting non‑eligible items: Cosmetic procedures, many over‑the‑counter medicines, and general health club dues are not deductible.
• Failing to consider the standard deduction: If the total of all itemized deductions (not only medical) doesn’t beat the standard deduction, bunching medical expenses alone may not make itemizing worthwhile.

Example scenarios (realistic)

1. Young couple with predictable expenses

• AGI = $80,000 → floor = $6,000. Regular medical costs = $5,500. A planned $1,000 dental procedure scheduled in the same year raises total to $6,500 → deductible = $500.

1. Family with a major child medical expense

• A family times major dental work for a child and coordinates orthotics and eye exams in Q4 to create a single high‑expense year and claim the excess over the floor.

1. Retiree with Medicare premiums

• A retiree paying Medicare Part B and out‑of‑pocket prescription costs may bunch additional dental/vision care into the same year to push them over 7.5% AGI.

When bunching is not worth it

• If the timing change would cause medical care to be delayed unacceptably or create poorer health outcomes, don’t delay care for tax reasons.
• If the administrative or cash‑flow cost of prepaying is high, the tax benefit may be small compared with the cost.
• If you expect to qualify for the standard deduction plus other tax credits, the net benefit of bunching may be negligible.

Final checklist before you act

• Run the math: calculate current AGI and the exact 7.5% floor
• Total predictable, eligible medical expenses for the coming 12 months
• Identify which expenses you can safely shift into a single tax year
• Confirm whether payments will be treated as made in that tax year (date of payment matters)
• Consult your CPA or tax preparer to model outcomes—including the interaction with HSAs and other deductions

Professional note and disclaimer

In my practice advising clients, bunching frequently helps households who already spend near the 7.5% threshold. Small timing moves (scheduling a procedure in December versus January) often convert nondeductible costs into an itemized deduction. However, this is planning, not medical advice: do not delay medically necessary care solely for tax reasons.

This article is educational and not a substitute for personalized tax advice. For individual guidance, consult a CPA or enrolled agent familiar with your full tax situation. See IRS Topic No. 502 for authoritative guidance on deductible medical expenses: https://www.irs.gov/taxtopics/tc502.

Authoritative sources and further reading

• IRS, Topic No. 502 — Medical and Dental Expenses: https://www.irs.gov/taxtopics/tc502
• IRS, Publication 502 (Medical and Dental Expenses) for details and examples
• FinHelp glossary: When It Pays to Itemize: A Year‑Round Planner — https://finhelp.io/glossary/when-it-pays-to-itemize-a-year-round-planner/
• FinHelp glossary: Schedule A (Itemized Deductions) — https://finhelp.io/glossary/schedule-a-itemized-deductions/

(Updated 2025.)