Medical expenses can quickly strain your budget, whether you’re paying for doctor visits, prescription medications or an unexpected surgery. If you had significant out-of-pocket healthcare costs during the year, the IRS may allow you to deduct some of those expenses on your federal tax return. The medical expense deduction is available only for qualifying unreimbursed expenses that exceed 7.5% of your adjusted gross income (AGI). You’ll also need to itemize your deductions instead of taking the standard deduction to claim it.

Below, we’ll explain who qualifies, which medical expenses are deductible and how to determine whether itemizing could reduce your tax bill.

What Is Tax Relief for Medical Expenses?

The medical expense tax deduction allows eligible taxpayers to deduct certain unreimbursed healthcare costs from their taxable income. You claim the deduction on Schedule A (Itemized Deductions) when filing your federal tax return.

Unlike a tax credit, which reduces your tax bill dollar for dollar, the medical expense deduction lowers your taxable income. The amount you save depends on your tax bracket and the total value of your itemized deductions.

Common Tax-Deductible Medical Costs

The IRS lets you deduct medical expenses that weren’t compensated by insurance, regardless of whether your insurance provider paid your medical provider directly or sent you reimbursement.

Qualifying costs can include any payments you made toward diagnosing, mitigating, curing, treating or preventing a disease. Here are some common tax-deductible medical costs.

Doctor and hospital expenses

• Physician visits
• Surgery and procedures
• Hospital stays
• Specialist care
• Emergency room care
• Diagnostic tests

Prescription medications

• Prescription drugs
• Insulin

Dental and vision care

• Dental treatment
• Oral surgery
• Eyeglasses
• Contact lenses
• Eye exams

Health insurance premiums

Health insurance premiums can qualify if you paid them out-of-pocket. This includes certain Medicare, marketplace health insurance and COBRA premiums. Medicare premiums that were directly subtracted from your Social Security benefits also qualify for tax relief.

Medical equipment and accessibility improvements

• Wheelchairs
• Hearing aids
• Prosthetics
• Certain home modifications, such as ramps or stair lifts

Expenses That Usually Do Not Qualify

Not all health-related costs qualify for tax relief. Some non-deductible expenses include:

• Cosmetic procedures that aren’t medically necessary
• Nonprescription drugs
• General health club or gym memberships
• Most vitamins and dietary supplements
• Funeral or burial expenses

Who Can Claim Medical Expenses?

You may qualify for the medical expense deduction if you meet all of the following requirements:

• Your qualifying, unreimbursed medical expenses exceed 7.5% of your adjusted gross income (AGI).
• You itemize deductions on Schedule A instead of claiming the standard deduction.
• The expenses were paid for yourself, your spouse or a qualifying dependent and weren’t reimbursed by insurance, a health savings account (HSA), a flexible spending account (FSA) or another source.

For example, if your AGI is $100,000, the first $7,500 of qualifying medical expenses isn’t deductible. If you paid $10,000 in eligible unreimbursed medical costs, you could deduct $2,500, the amount above the 7.5% threshold.

Dependents are defined as qualifying children or relatives who rely on you for financial support. If you have kids, they’re considered dependents up until the age of 19 or 24 if they’re a full-time student.

Are Medical Expenses for Parents Deductible?

You can claim medical expenses you paid on behalf of a parent if your parent qualifies as a dependent. Your parent must:

• Get more than half their financial support from you
• Have a gross income under $5,050

The IRS requires some dependents to live with you year-round, but it provides an exception for direct relatives like parents.

There’s no specific dollar cap on how much you can claim for parents’ medical expenses. It’s subject to the normal medical deduction rules.

What Is the Most Overlooked Tax Break?

While it’s easy to identify costs for surgeries and prescriptions, there are some other qualifying medical costs that may not be so obvious.

“Mileage to and from appointments are commonly missed,” says Chad Gammon, a Certified Financial Planner, Enrolled Agent and the owner of Custom Fit Financial. “You can also deduct any parking fees or tolls to get to the appointments.”

The current IRS medical mileage rate is 21 cents per mile. Here are some other commonly overlooked costs you could include when claiming tax relief for medical expenses:

• Long-term care expenses: These could include assisted living or nursing care costs that weren’t reimbursed by insurance.
• Medicare premiums: If you paid premiums for Medicare Parts B, C and D Medicare supplement (Medigap), you may be able to deduct these costs.
• Medical expenses for qualifying dependents: You can often deduct medical costs you paid on behalf of your dependents, including adult children or elderly parents who qualify as dependents.

Remembering to include these often-overlooked payments may help you cross the 7.5% AGI threshold for medical expenses tax relief.

Does Income Affect the Medical Expense Deduction?

Unlike some tax rebates and credits, the medical expense deduction doesn’t have a minimum or maximum income limit. Instead, eligibility depends on how much you spend on qualifying unreimbursed medical expenses relative to your AGI.

Because only expenses that exceed 7.5% of your AGI are deductible, lower-income taxpayers may reach the threshold with smaller medical bills than higher-income taxpayers.

For example, someone with an AGI of $40,000 could begin claiming the deduction after paying more than $3,000 in qualifying medical expenses. A taxpayer with an AGI of $150,000 wouldn’t qualify until eligible expenses exceeded $11,250.

While income doesn’t determine eligibility on its own, it does affect how much you must spend on healthcare before the deduction becomes available.

Should You Itemize Your Deductions?

Even if you qualify for the medical expense deduction, itemizing only makes sense if your total itemized deductions exceed the standard deduction for your filing status.

Taxpayers with unusually high healthcare costs — such as those managing a chronic illness, recovering from a major procedure or supporting a family member with significant medical needs — may find that their combined itemized deductions are greater than the standard deduction, making itemizing the more beneficial option.

In addition to medical expenses, itemized deductions can include mortgage interest, certain state and local taxes and charitable contributions.

Steps to Claim Medical Expense Tax Relief

If the medical expense tax deduction makes sense for your situation, these are the steps you can take to claim it:

• Step 1: Gather your documentation. This could include medical bills, pharmacy receipts, payment records (like bank or credit card statements) and insurance statements that show costs that weren’t reimbursed.
• Step 2: Calculate your qualifying expenses. Exclude any costs that were reimbursed by insurance when adding up the total of your eligible medical expenses.
• Step 3: Apply the AGI threshold. Figure out what 7.5% of your AGI is. Then subtract that amount from your total eligible expenses. The difference is how much you can claim as a deduction.
• Step 4: Itemize your deductions on Schedule A. On this form, you can claim your medical expenses above the 7.5% threshold, along with state taxes, mortgage interest and charitable donations.

If your total itemized deductions are lower than the standard deduction, it probably doesn’t make sense to itemize and claim the medical deduction. In this case, you’d save more money by skipping the medical deduction and claiming the standard deduction instead.

When to Seek Professional Tax Help

If you have a relatively straightforward situation, you may be comfortable navigating the medical expense deduction on your own. But taxpayers with more complex situations may benefit from professional tax help.

For instance, working with a tax expert may be helpful in cases that involve:

• Major surgeries or other medical events
• Complex family situations where dependency status is unclear
• Supporting elderly parents
• Long-term care or nursing home expenses
• Large itemized deductions in multiple categories
• Mixed insurance reimbursements and out-of-pocket costs

“It can be good to have a second set of eyes looking at your situation,” says Gammon. “It can get tricky if you are self-employed or own a business or if you have multi-state residency. Other major life events such as a divorce, retirement or an inheritance can [also] add some wrinkles.”

A qualified tax professional can help you navigate complicated situations and help ensure you’re correctly following IRS rules. They can aid you in maximizing your medical tax deduction without overclaiming on your taxes.

Bottom Line

The IRS offers tax relief for medical expenses, but strict eligibility requirements apply. You can only claim qualifying medical costs that weren’t reimbursed for insurance and exceed 7.5% of your adjusted gross income. Plus, you must itemize rather than claiming the standard deduction.

Routine healthcare costs may not qualify on their own, but you’re more likely to be eligible if you paid for significant medical events for yourself, your spouse or your dependents. Lower-income borrowers will have a lower threshold to cross than high-income borrowers, since their medical costs may make up a higher proportion of their pay.

As with most tax relief programs, the benefit largely depends on your individual financial situation. By evaluating your income and qualifying expenses — or enlisting a tax professional in more complex situations — you can decide whether the medical expense deduction makes sense for you.

FAQs About Medical Expense Tax Relief

What is the IRS rule on medical expenses?The IRS lets you deduct qualifying, unreimbursed medical expenses that exceed 7.5% of your adjusted gross income, but only if you itemize rather than taking the standard deduction. You can deduct eligible medical costs that you paid for yourself, your spouse or your dependents.

Is it worth claiming medical expenses on taxes?It can be worth claiming medical expenses on your taxes if your itemized deductions exceed the standard deduction. Your itemized deductions may be higher if you paid a lot toward medical costs, state or local taxes, mortgage interest or donations to charity.

Can I claim my parents’ medical expenses?You can claim your parents’ eligible medical expenses if your parents qualify as dependents under IRS rules. Your parents may qualify if they have a gross income under $5,050 and get more than half their financial support from you.

What is the maximum deduction for parents’ medical expenses?There’s no maximum deduction for parents’ medical expenses, but you can only claim eligible expenses that exceed 7.5% of your AGI. Plus, you must itemize your taxes and your parents must qualify as dependents under IRS guidelines.

What medical expenses are not deductible?Non-deductible medical expenses include voluntary cosmetic procedures, gym memberships, non-prescription supplements, and other personal health costs that aren’t medically necessary or prescribed by a doctor.

Reporting by Rebecca Safier, Special to USA TODAY / USA TODAY Network via Reuters Connect.