California Medical Expense Deduction: How CA Rules Differ From Federal (2025)

California residents face some of the highest healthcare costs in the country — and some unique tax rules around medical expense deductions. Understanding how California’s medical expense deduction works, and how it compares to the federal rules, can help you plan to reduce both your federal and state tax bills.

California Follows Federal Medical Expense Rules

California’s medical expense deduction largely follows federal rules — the same expenses that qualify for the federal deduction also qualify for the California deduction. The same categories of qualifying costs apply: prescription drugs, doctor and dental fees, hospital costs, medical equipment, health insurance premiums (paid with after-tax dollars), long-term care costs, and other expenses covered under IRS Publication 502.

The Key Difference: California Uses a 7.5% AGI Threshold Too

California conforms to the federal 7.5% AGI threshold for medical expense deductions. This means the same floor applies for California as for your federal return — only medical expenses exceeding 7.5% of your California AGI are deductible. Because California’s AGI calculation can differ from the federal one (due to certain income items that are treated differently under state law), your California threshold may not be identical to your federal threshold, but it will typically be close.

California Has Its Own Standard Deduction

Unlike the federal standard deduction ($15,000 single / $30,000 married in 2025), California’s standard deduction is much lower: $5,202 for single filers and $10,404 for married filing jointly in 2025 (amounts subject to annual adjustment). This lower standard deduction makes it much more common for California taxpayers to itemize on their state return — which means the medical expense deduction may be available to more Californians than the federal version.

This is important: even if you take the federal standard deduction (because your federal itemized deductions don’t exceed the high federal threshold), you may still benefit from itemizing on your California state return. In California, you can itemize on your state return and take the standard deduction on your federal return — they are completely independent elections.

Why the California Standard Deduction Changes Everything

Because California’s standard deduction is so low, even modest medical expenses can make itemizing worthwhile at the state level. Consider a single California taxpayer with $8,000 in total itemized deductions (including medical expenses above the 7.5% threshold): their state itemized deductions exceed the $5,202 standard deduction, so they should itemize in California even if they take the standard deduction federally.

This dual strategy — standard deduction federally, itemized deductions at the state level — is very common and entirely legal for California taxpayers.

California’s High Medical Costs

California has among the highest healthcare costs in the United States, particularly in the Bay Area and Los Angeles. Doctor fees, hospital bills, dental costs, and especially prescription medications can be significantly higher than in other states. This means Californians are more likely to have total medical expenses that exceed the 7.5% AGI threshold than people in lower-cost states — potentially making the medical expense deduction more accessible to a broader range of California taxpayers.

Covered California and the Premium Tax Credit

California’s state health insurance marketplace, Covered California, provides access to subsidized health insurance. If you receive the Premium Tax Credit through Covered California, the portion of your premiums paid by the credit are not deductible — only the amount you paid out of pocket after any subsidy. This is the same rule as under federal law: the deduction only applies to costs you actually paid.

California also has a state-level health coverage mandate (requiring most Californians to have health insurance), which underscores the importance of understanding healthcare tax implications in the state.

Medical Cannabis in California: A Special Situation

California has a robust medical cannabis program, and many patients use cannabis for pain management, anxiety, and other conditions with a doctor’s recommendation. However, medical cannabis is not deductible as a medical expense under federal law — the IRS follows federal law, under which cannabis remains a Schedule I controlled substance. California taxes follow federal rules here, so California also does not allow a medical expense deduction for cannabis costs.

California’s Seniors: Additional Considerations

California does not provide an enhanced standard deduction for seniors (unlike the federal system, which adds $2,000 per person for those 65+). This means California seniors have the same low standard deduction as everyone else — which, combined with Medicare premiums, out-of-pocket healthcare costs, hearing aids, and dental work that Medicare typically doesn’t cover, often makes itemizing on their California return worthwhile even when their total medical expenses are modest.

How to Claim the Medical Expense Deduction in California

To claim medical expense deductions on your California state return, you’ll itemize using California Schedule CA (540), which is the California equivalent of federal Schedule A. The medical expense section follows the same rules as the federal form — you’ll list total qualifying medical expenses, apply the 7.5% AGI floor, and deduct the excess. Most California tax software (TurboTax, TaxAct, H&R Block) handles this calculation automatically when you indicate you’re itemizing.

The Bottom Line for California Taxpayers

California’s medical expense deduction mirrors federal rules — same qualifying expenses, same 7.5% AGI threshold. The key difference that benefits California taxpayers: the state’s very low standard deduction ($5,202 single / $10,404 married) means itemizing makes sense at the state level even when it doesn’t at the federal level. If you’re a California resident who takes the federal standard deduction, always check whether itemizing on your California return (and claiming the medical expense deduction there) would reduce your state tax bill.