The 7.5% AGI Threshold
Medical expenses are only deductible to the extent they exceed 7.5% of your Adjusted Gross Income (AGI). This is a significant hurdle — most people don’t reach it.
Example: AGI = $80,000. Threshold = $6,000. If you had $9,000 in medical expenses, you can deduct $3,000 ($9,000 − $6,000).
What Qualifies
The IRS allows deductions for amounts paid for diagnosis, cure, mitigation, treatment, or prevention of disease:
- Doctor, dentist, and hospital fees
- Prescription drugs and insulin
- Long-term care insurance premiums (age-based limits)
- Vision and dental expenses
- Mental health treatment
- Medically necessary home modifications (wheelchair ramps, etc.)
- Transportation costs for medical care (2025 rate: 21 cents/mile)
- Hearing aids and eyeglasses
- COBRA premiums (if not deducting elsewhere)
What Does NOT Qualify
- Cosmetic surgery (unless medically necessary)
- Over-the-counter drugs (unless prescribed)
- Gym memberships and weight loss programs (unless prescribed)
- Vitamins and supplements (unless prescribed)
- Teeth whitening
- Funeral expenses
- Medical insurance premiums paid through a pre-tax employer plan
How to Claim
Medical expenses are an itemized deduction on Schedule A, Line 1. You must itemize (not use the standard deduction) for this to benefit you.
When It Makes Sense to Track Medical Expenses
Even if you don’t expect to exceed the threshold, track everything. A serious illness, major surgery, or combination of expenses can push you over $6,000–$10,000+ in a single year.
Better Alternative: HSA + HDHP
If you’re healthy, the best strategy is often an HSA (Health Savings Account) with a high-deductible health plan. HSA contributions are pre-tax, grow tax-free, and withdrawals for qualified medical expenses are tax-free — no AGI threshold.