745 / What are the limits on the medical expense deduction?

Editor’s Note: The 2021 year-end Consolidated Appropriations Act permanently reduced the medical expense deduction threshold from 10 percent to 7.5 percent.A taxpayer who itemizes deductions can deduct unreimbursed expenses for “medical care” (the term “medical care” includes dental care) and expenses for prescribed drugs or insulin for himself, a spouse and dependents, to the extent that such expenses exceed 7.5 percent -of adjusted gross income. (On a joint return, the 7.5 percent floor amount is based on the combined adjusted gross income of both spouses.) The taxpayer first determines net unreimbursed expenses by subtracting all reimbursements received during the year from total expenses for medical care paid during the year. He or she must then subtract 7.5 percent of his adjusted gross income from net unreimbursed medical expenses; only the balance, if any, is deductible.¹ The deduction for medical expenses is not subject to the phaseout in itemized deductions for certain upper income taxpayers that applied before 2018. (See Q 731.)

Though the 7.5 percent threshold was temporarily increased to 10 percent in 2013-2016, the 7.5 percent threshold continued to apply through 2016 if the taxpayer or the taxpayer’s spouse turned age 65 before the end of the taxable year. See Q for examples of the types of expenses that can be deducted under the medical expense deduction.

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1. IRC § 213.

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