Medical expenses can lower your taxable income, which may increase your refund

When you have significant medical costs, you can deduct them on your tax return — but only if you itemize deductions instead of taking the standard deduction. If your medical expenses are large enough to make itemizing worthwhile, your taxable income goes down, which can increase your refund. The catch is that you can only deduct medical costs that exceed a certain percentage of your income, and the threshold is high enough that most people don't benefit.

The IRS allows you to deduct medical and dental expenses that you paid out of your own pocket during the tax year. This includes doctor visits, hospital stays, prescription medications, medical equipment, and some travel costs to get medical care. However, you cannot deduct health insurance premiums you paid through your employer's payroll, and you cannot deduct amounts that were reimbursed by insurance.

Whether this actually increases your refund depends on two things: whether your medical expenses are large enough to deduct at all, and whether itemizing deductions saves you more money than the standard deduction would.

Key Takeaways

  • You can only deduct medical expenses if you itemize deductions, and only the amount that exceeds a percentage of your adjusted gross income set by the IRS each year.
  • The IRS threshold for medical deductions is high — typically around 7.5% of your income — so most people's medical costs don't reach the deductible amount.
  • Itemizing deductions only helps your refund if your total itemized deductions exceed the standard deduction for your filing status.
  • Medical expenses that were reimbursed by insurance or paid through a pre-tax employer plan cannot be deducted.

Understanding the medical expense deduction threshold

The IRS does not let you deduct every dollar of medical expenses. Instead, you can only deduct the amount that exceeds a certain percentage of your adjusted gross income (AGI) — the income number on your tax return after certain deductions are applied. For the 2024 tax year, that threshold is 7.5% of your AGI.

Here is how it works in practice: if your AGI is $50,000 and your medical expenses were $6,000, you would calculate 7.5% of $50,000, which is $3,750. You can only deduct the amount above that threshold: $6,000 minus $3,750 equals $2,250 in deductible medical expenses. That $2,250 reduces your taxable income.

Because the threshold is 7.5%, most people's medical costs never reach it. You would need medical expenses of at least $3,750 on a $50,000 income, or $7,500 on a $100,000 income, just to deduct anything at all. For many households, even a serious illness or injury does not cross that line.

When itemizing deductions actually increases your refund

Even if your medical expenses clear the 7.5% threshold, you only benefit if itemizing deductions saves you more money than taking the standard deduction. The standard deduction is a flat amount the IRS lets you subtract from your income without listing specific expenses — for 2024, it ranges from $14,600 for single filers to $29,200 for married couples filing jointly, though these amounts change each year.

If your total itemized deductions (medical expenses plus mortgage interest, property taxes, charitable donations, and other deductible expenses) exceed your standard deduction, then itemizing is worth doing. If they don't, you take the standard deduction instead, and your medical expenses don't reduce your taxable income at all.

Example: You are married filing jointly with an AGI of $100,000 and medical expenses of $10,000. Your medical deduction would be $10,000 minus $7,500 (7.5% of $100,000), which equals $2,500. If your only itemized deduction is that $2,500 in medical costs, your total itemized deductions are $2,500 — far below the $29,200 standard deduction. You would take the standard deduction instead, and the medical expenses would not reduce your taxable income at all.

What counts as a deductible medical expense

The IRS has a broad definition of medical expenses. Deductible costs include doctor and dentist visits, hospital and surgical fees, prescription medications, medical equipment like wheelchairs or hearing aids, and mental health treatment. You can also deduct some travel costs — mileage to medical appointments, parking, tolls, and lodging if you travel out of town for medical care.

What does not count: over-the-counter medications (with a narrow exception for insulin), cosmetic procedures, gym memberships or general wellness expenses, and any costs covered by insurance or reimbursed by your employer. If your employer offers a Flexible Spending Account (FSA) or Health Savings Account (HSA), money you contribute to those accounts comes out of your paycheck before taxes, so you cannot also deduct those same expenses on your tax return.

Keep receipts and documentation for any medical expenses you plan to deduct. The IRS does not require you to submit them with your return, but you must have them if the IRS asks questions later.

How medical expenses interact with other deductions

Medical expenses are just one type of itemized deduction. Others include mortgage interest, state and local taxes (capped at $10,000), charitable donations, and casualty losses. If you have a combination of these expenses, they add together to determine whether itemizing is worth doing.

For example, if you have $2,500 in deductible medical expenses, $8,000 in mortgage interest, and $5,000 in charitable donations, your total itemized deductions would be $15,500. If you are single with a standard deduction of $14,600, itemizing saves you money. Your medical expenses contributed to that benefit, even though they alone would not have justified itemizing.

Special situations: employer plans and insurance reimbursement

If your employer offers a Flexible Spending Account or Health Savings Account, money you set aside in those accounts is deducted from your paycheck before income tax is calculated. You cannot deduct those same expenses again on your tax return — that would be double-dipping. Only out-of-pocket medical costs you paid with after-tax money can be deducted.

Similarly, if your insurance reimbursed you for a medical expense, you cannot deduct it. You deduct only the portion you paid yourself. If you had a $5,000 surgery and insurance covered $4,000, you can only deduct the $1,000 you paid out of pocket (assuming you meet the 7.5% threshold).

Frequently Asked Questions

Do I need to file a different form to deduct medical expenses?

No. If you itemize deductions, you use Schedule A (Form 1040), which is the standard form for itemized deductions. Medical expenses go on that form. You do not need a separate form or filing status.

What if I had a major surgery or accident — will that definitely increase my refund?

Not necessarily. Even a $20,000 surgery may not increase your refund if your income is high enough that 7.5% of it exceeds the cost, or if your total itemized deductions still fall short of the standard deduction. The size of the expense matters less than whether it crosses both thresholds.

Can I deduct health insurance premiums I pay myself?

If you are self-employed, you can deduct health insurance premiums as a business expense, not as an itemized deduction. If you are an employee and pay premiums out of pocket (not through payroll), those premiums cannot be deducted on your tax return.

If I deduct medical expenses one year, can I deduct them again the next year?

You can only deduct medical expenses in the year you paid them. If you had $8,000 in medical costs in 2024, you deduct them on your 2024 return. Medical costs from 2025 go on your 2025 return. You cannot carry them forward or back.

Should I wait until the end of the year to pay medical bills to increase my deduction?

Only if you are close to the threshold and timing matters. Medical expenses are deductible in the year you pay them, so paying a bill in December instead of January changes which year you deduct it. However, this only helps if you are trying to reach the 7.5% threshold in a specific year.