The medical expense deduction has a catch that stops most people from ever claiming it: you can only deduct the portion of your medical costs that exceeds 7.5% of your adjusted gross income (AGI). If your AGI is $70,000, your first $5,250 in medical expenses is essentially invisible to the IRS — only what you spend above that number counts.
This guide explains exactly how the threshold works, what expenses count toward it, and — most importantly — the legal strategies for clearing it in years when you’re close.
How the 7.5% Threshold Works, Step by Step
The calculation is straightforward once you understand the structure:
- Find your AGI — this is Line 11 on your Form 1040. It’s your gross income minus certain above-the-line deductions (like IRA contributions, student loan interest, and self-employed health insurance).
- Multiply by 7.5% — this is your threshold. Only expenses above this number are potentially deductible.
- Total your qualifying medical expenses — everything on the IRS-approved list (see below).
- Subtract the threshold — the remaining amount is your deductible medical expense.
- Compare to your standard deduction — you only benefit if your total itemized deductions exceed the standard deduction.
Example: AGI = $65,000. Threshold = $65,000 × 7.5% = $4,875. Total qualifying medical expenses = $8,200. Deductible amount = $8,200 − $4,875 = $3,325.
Use the free AGI medical expense calculator to run your exact numbers in under two minutes.
What Counts as a Qualifying Medical Expense?
The IRS definition of deductible medical expenses is broader than most people expect. Under IRS Publication 502, qualifying expenses include:
Medical and Dental Care
- Doctor, dentist, and specialist visits
- Prescription medications
- Psychiatric and psychological care (including therapy)
- Hospital and nursing home fees
- Surgery and lab fees
- Chiropractic, acupuncture, and physical therapy (if prescribed)
- Fertility treatments and in-vitro fertilization
- Addiction treatment programs
Vision and Hearing
- Glasses and contact lenses
- LASIK eye surgery
- Hearing aids and batteries
- Eye exams
Equipment and Supplies
- Wheelchairs, crutches, and prosthetics
- CPAP machines and sleep apnea devices
- Blood sugar monitors and test strips
- Insulin
- Breast pumps (qualified by IRS in 2011)
Long-Term Care
- Qualified long-term care insurance premiums (age-limited)
- Nursing home care
- In-home care for a chronically ill person
Transportation for Medical Care
- Medical travel by car at 21¢/mile (2025 rate), plus tolls and parking
- Airfare or transportation to reach a medical facility
- Lodging near a medical facility (up to $50/night)
Insurance Premiums
Health insurance premiums count — but only those you paid with after-tax dollars. Premiums paid through your employer’s pre-tax payroll deduction are already excluded from your income and cannot be deducted again. Premiums for Medicare Parts B and D are deductible. Self-employed individuals have a separate, more favorable deduction for health insurance premiums as an above-the-line deduction (before AGI).
What Does NOT Count
- Over-the-counter medications (unless prescribed) — though HSA/FSA rules differ
- Cosmetic surgery (unless correcting a deformity or accident injury)
- Gym memberships (even if doctor-recommended)
- Vitamins and supplements (unless prescribed for a specific medical condition)
- Teeth whitening
- Hair transplants
- Medical marijuana (even in states where legal — it’s a Schedule I drug federally)
- Expenses reimbursed by insurance or an HSA/FSA
The Strategy: Bunching Medical Expenses
If your medical expenses in a given year are close to — but not quite over — your 7.5% threshold, there’s a legal and widely-used strategy: bunching.
Instead of spreading discretionary medical spending across two years, you accelerate elective procedures and purchases into a single tax year to clear the threshold in that year. The following year, you take the standard deduction.
Example of bunching in practice: You need new glasses ($400), have been putting off a dental crown ($1,200), and your AGI threshold is $4,800. You currently have $3,800 in qualifying expenses — $1,000 short of the threshold. By scheduling the dental work and glasses before December 31st, you’d have $5,400 in qualifying expenses and a $600 deduction. Not huge — but combined with other itemized deductions, it could push you past the standard deduction threshold.
A High Medical Expense Year: When This Deduction Is Actually Significant
For most people in normal years, the 7.5% threshold prevents them from ever deducting medical costs. But in years with major medical events — a serious illness, hospitalization, cancer treatment, major surgery, long-term care for a parent — this deduction can be worth tens of thousands of dollars.
At a $60,000 AGI with $25,000 in out-of-pocket medical costs:
- Threshold: $60,000 × 7.5% = $4,500
- Deductible amount: $25,000 − $4,500 = $20,500
- Tax savings at 22% bracket: $4,510
This is precisely the scenario where it’s worth itemizing even if you normally take the standard deduction. Check whether your total itemized deductions (medical + mortgage interest + state taxes up to $10,000 + charitable) exceed $15,000 (single) or $30,000 (married).
HSA and FSA: How They Interact With This Deduction
Any medical expense paid with HSA or FSA funds cannot be deducted on Schedule A — it would be double-dipping. The deduction is only available for out-of-pocket costs you paid with after-tax money. If your employer contributed to your HSA, you cannot deduct expenses paid from those contributions either.
This means high HSA users often have smaller qualifying medical expense totals on Schedule A, even in expensive medical years — because more of their costs were covered pre-tax.
Run Your Numbers
The fastest way to know whether you’ll clear the 7.5% threshold is to plug your actual AGI and medical costs into the free medical expense calculator. It will tell you instantly whether you qualify, what your deductible amount is, and whether itemizing makes sense given the standard deduction in 2025.
If you want to understand the full picture of deductible medical expenses — including dental, vision, prescriptions, and long-term care — the complete medical deductions guide covers every category with IRS source citations.