Medical Expense Deduction
The medical expense deduction — governed by 26 U.S.C. § 213 — allows taxpayers who itemize to deduct unreimbursed medical and dental expenses that exceed 7.5% of adjusted gross income (AGI), a floor that makes this deduction meaningful primarily for people with high medical costs relative to their income, or for retirees whose medical spending is significant and whose AGI has declined. In practice, the deduction is available only to about 9 million tax filers who both itemize (rather than take the standard deduction) and have medical costs high enough to clear the 7.5% threshold — a relatively small share of taxpayers. Eligible expenses are broad: doctor and dentist visits, hospital stays, prescription drugs (not OTC), health insurance premiums paid out-of-pocket (not employer-provided), long-term care premiums (subject to age-based caps), medical equipment, and even mileage to medical appointments (21¢/mile in 2026). Expenses reimbursed by insurance, FSAs, or HSAs don't qualify. The 7.5% floor was temporarily lowered to 7.5% from 10% by the TCJA in 2017 and has been made permanent at 7.5% by subsequent legislation, reversing an earlier scheduled increase to 10% that would have reduced the deduction's reach. The deduction interacts closely with HSAs (contributions reduce taxable income but also reduce the medical expenses you can deduct) and long-term care planning — for retirees paying significant LTC premiums or nursing home costs, the § 213 deduction can be one of the most valuable in their tax return.
Current Law (2026)
Taxpayers who itemize can deduct unreimbursed medical and dental expenses exceeding 7.5% of AGI.
| Parameter | Value |
|---|---|
| Floor | 7.5% of AGI |
| Eligible expenses | Doctor, dental, hospital, prescription drugs, insurance premiums, long-term care, medical devices, travel for medical care |
| Not eligible | Cosmetic surgery (unless for deformity), OTC drugs (unless prescribed), gym memberships, general health |
Legal Authority
- 26 U.S.C. § 213 — Medical, dental, etc., expenses
How It Works
Under 26 U.S.C. § 213, you can only deduct unreimbursed medical expenses that exceed 7.5% of your AGI — the floor that determines who actually benefits. If your AGI is $80,000, the first $6,000 of medical costs produces zero deduction; at $120,000 AGI the floor rises to $9,000. This design intentionally limits the deduction to people with unusually high costs, not routine health spending. The statutory definition of "medical care" under § 213(d) is broader than most people expect: it covers diagnosis, cure, mitigation, treatment, or prevention of disease, or treatments affecting any structure or function of the body — including physician, dental, and vision care; prescription drugs; mental health and addiction treatment; physical therapy; medical equipment (wheelchairs, hearing aids, CPAP machines, insulin pumps); guide dogs; and medical mileage. Health, dental, vision, and qualifying long-term care insurance premiums count if paid with after-tax dollars; employer-paid premiums and FSA/HSA reimbursements do not, because those dollars were never taxed.
Nursing home stays qualify fully when the primary purpose is medical care — costs including meals and lodging are deductible, which can represent $60,000–$120,000 per year for residents paying privately. Long-term care insurance premiums count up to age-based caps under § 213(d)(10) — ranging from approximately $480 for those 40 and under to approximately $5,900 for those 71 and older in 2026. Home modifications made for medical reasons (wheelchair ramps, grab bars, stairlifts, pools for physical therapy) are deductible only to the extent they exceed any increase in home value — a physician letter documenting medical necessity is essential for IRS scrutiny. For retirees, Medicare Part B premiums ($185/month standard in 2026), Part D, and Medigap premiums all count, and lower retirement AGI often makes clearing the 7.5% floor far easier than during working years.
How It Affects You
If you have a high-medical-expense year: Bunching is the core strategy. The 7.5% AGI floor means that at $80,000 AGI, the first $6,000 of medical expenses produces zero deduction. But expenses 7 through 10 — say, $30,000 — are fully deductible if you itemize. If you're having expensive procedures across two calendar years (e.g., a surgery in December and a follow-up in January), consider whether scheduling both in the same year would push you over the floor. At the 22% bracket, $30,000 of deductible expenses is worth $6,600 in tax savings.
If you're paying for fertility treatments: IVF, egg freezing, insemination, and fertility medications qualify as deductible medical expenses when treating a diagnosed condition affecting fertility. At $15,000-$25,000 per cycle, one or two rounds can easily clear the 7.5% floor for many households. Confirm the qualifying condition documentation is in place — IRS requires medical necessity, not just elective enhancement.
If you're considering GLP-1 medications (Ozempic, Wegovy, Mounjaro): Deductibility is unsettled. If prescribed to treat Type 2 diabetes or a diagnosed cardiovascular condition, the cost likely qualifies. If prescribed solely for weight loss without a specific comorbidity diagnosis, IRS guidance has not definitively allowed the deduction. At $10,000+ annually, this is worth documenting carefully — ask your physician to note the specific diagnosed condition being treated, not just "weight management."
If you're caring for an aging parent or paying for long-term care: Nursing home costs (if primarily for medical care), in-home aides, and qualified long-term care insurance premiums all count as medical expenses. If you're providing more than 50% of your parent's support (even if they don't qualify as a tax dependent due to SS income), their medical expenses you pay can be added to your 7.5% calculation. The age-based LTC premium deduction limits ($480 to $6,200 in 2025, indexed for 2026) create a meaningful deduction pathway for older policyholders.
If you're self-employed: The self-employed health insurance deduction under IRC § 162(l) is above-the-line — meaning it reduces your AGI, which in turn raises your medical expense deduction threshold. Don't put your health insurance premiums in the itemized medical expense bucket if you qualify for the above-the-line deduction — the above-the-line treatment is always more valuable because it reduces MAGI (affecting ACA subsidies, student loan repayment, and other income-sensitive calculations).
State Variations
Most states with income taxes allow a medical expense deduction, but the details vary enough to affect your planning:
- States with their own AGI floor: Some states use a different percentage threshold than the federal 7.5%. Indiana does not allow the medical expense deduction at all. Massachusetts provides no itemized medical deduction because MA does not follow the federal itemized deduction system.
- States without itemized deductions: Illinois, Indiana, Michigan, Ohio, and several others use flat income tax rates without itemized deductions — residents get no state-level medical expense deduction regardless of federal eligibility.
- California: Conforms to the federal 7.5% AGI floor and federal definition of qualified medical expenses; CA residents who itemize on federal returns and have significant medical expenses can deduct them on state returns too.
- New York: Follows federal medical expense deduction rules; NY itemizers can deduct qualifying medical expenses above 7.5% of NY AGI.
- New Jersey: NJ's tax system does not follow federal itemized deduction rules; NJ provides a limited medical expense deduction of its own, but it is structured differently and may not parallel the federal benefit.
The practical implication: high-medical-expense years that push you to itemize federally may or may not produce a state deduction, depending entirely on your state's conformity. In flat-tax states without itemized deductions, the medical expense deduction is only a federal benefit.
Implementing Regulations
- 26 CFR Part 1 — Income tax regulations (§ 1.213-1 — medical, dental, and other expenses; definition of medical care; 7.5% AGI floor; eligible expenses including long-term care, insurance premiums, prescription drugs)
Pending Legislation
- HR 2062 (Rep. Kelly, R-PA) — Would treat payments to health care sharing ministries as medical expenses, expanding the universe of deductible medical costs. Status: Introduced.
- S 653 (Sen. Budd, R-NC) — Senate companion: lets members deduct payments to faith-based health care sharing ministries and declares those ministries are not treated as insurance under the tax code. Status: Introduced.
Recent Developments
- 7.5% floor made permanent: The Taxpayer Certainty and Disaster Tax Relief Act of 2020 permanently set the AGI floor at 7.5% (it had been scheduled to rise to 10% under earlier law). This is now settled — no annual extension needed. For a household with $80,000 AGI, the first $6,000 of medical expenses is nondeductible; expenses beyond that are potentially deductible if you itemize.
- GLP-1 weight loss drugs and deductibility: IRS has not issued broad guidance allowing deduction of GLP-1 medications (Ozempic, Wegovy, Mounjaro) solely for weight loss. If prescribed for a specific diagnosed condition (Type 2 diabetes, obesity-related cardiovascular risk), the cost may qualify as a medical expense. This is an unsettled area with significant dollar amounts at stake — annual GLP-1 costs can reach $10,000+. Consult a tax adviser before claiming.
- Long-term care premium limits: The IRS annually adjusts the maximum deductible long-term care insurance premium amounts based on age. For 2025, limits range from $480 (age 40 or younger) to $5,880 (age 71+). These amounts count toward the 7.5% AGI threshold alongside other medical expenses.
- Fertility treatment deductibility confirmed: IRS guidance has affirmed that fertility treatments — IVF, egg freezing, fertility medications — qualify as deductible medical expenses when they treat a medical condition affecting the ability to have children. Costs can easily exceed $20,000 per cycle, making this a meaningful deduction for families pursuing these treatments in a high-expense year.