Tax Tip Tuesday: Medical Expense Deductions – What Qualifies?

When it comes to lowering your taxable income, medical expense deductions can be a valuable tool—but only if you understand what qualifies. Many taxpayers miss out simply because they don’t realize which costs can be deducted or how to claim them properly.

To deduct medical expenses, you must itemize your deductions on Schedule A (Form 1040). You can only deduct the portion of your unreimbursed medical expenses that exceeds 7.5% of your adjusted gross income (AGI). For example, if your AGI is $60,000, you can deduct only the qualified medical expenses that exceed $4,500.

What Qualifies as a Deductible Medical Expense?

According to IRS Publication 502, the following categories of expenses generally qualify:

1. Payments to Medical Providers: Doctor visits, surgeons, dentists, chiropractors, psychiatrists, psychologists, and other licensed healthcare providers.

2. Hospital and Long-Term Care: Inpatient hospital care, nursing home care (if primarily for medical, not personal, care), and costs for required medical services.

3. Prescriptions and Medical Supplies: Prescription medications (not over-the-counter unless prescribed), insulin, bandages, and certain durable medical equipment.

4. Health Insurance Premiums: Premiums for health insurance you pay out of pocket, including COBRA and Medicare Parts B and D. Employer-paid premiums or pre-tax payroll deductions do not qualify.

5. Transportation for Medical Care: Mileage (at $0.21 per mile for 2025), parking fees, tolls, and public transportation to and from doctor’s offices or hospitals.

6. Mental Health and Therapy: Psychotherapy, counseling (if for medical purposes), and treatment for substance use disorders.

7. Dental and Vision Care: Cleanings, fillings, braces, glasses, contact lenses, eye exams, and even LASIK surgery.

8. Medical-Related Home Improvements: Modifications made to accommodate a disability, such as ramps, widened doorways, or support bars. Only the portion that doesn't increase the home’s value may be deductible.

9. Certain Assisted Reproductive Procedures: In-vitro fertilization (IVF), fertility treatments, and sperm or egg storage fees (if part of necessary treatment).

What Doesn't Qualify?

• Cosmetic surgery (unless necessary to improve a deformity or injury)

• Over-the-counter drugs and supplements without a doctor’s prescription

• General health purchases like vitamins, gym memberships, or spa treatments

Documentation Matters

Keep records of all payments including receipts, prescriptions, mileage logs, and insurance statements. If audited, you’ll need proof that the expenses were actually paid and medically necessary.

Because the 7.5% AGI threshold is often hard to meet, many taxpayers benefit most when medical expenses are bunched in a single year—such as when a major surgery or treatment occurs. If you have any questions, reach out to may.sung@mkhstaxgroup.com.