Are Medical Expenses Tax Deductible? The 7.5% AGI Math

Short answer: sometimes, partially, and less often than people expect.

The medical expense deduction is real, and in a heavy year it’s worth meaningful money. But it’s gated behind two hurdles that filter out most households, and understanding both before you start collecting receipts saves a lot of disappointment in April.

The two hurdles

Hurdle one: the 7.5% floor. You can only deduct qualified unreimbursed medical expenses that exceed 7.5% of your adjusted gross income. The first 7.5% is invisible to the deduction entirely.

Hurdle two: you have to itemize. The medical deduction lives on Schedule A. If your total itemized deductions don’t beat the standard deduction, you take the standard deduction and the medical figure does nothing at all.

Both hurdles have to clear. A household with $9,000 of medical spending and no mortgage often gets no benefit whatsoever — not because the spending didn’t qualify, but because their itemized total still lost to the standard deduction.

The calculation, worked

All figures below are assumptions for this example.

A married-filing-jointly household with an adjusted gross income of $92,000. Here’s their year of healthcare spending:

Step 1 — Total qualified unreimbursed expenses: $3,214 + $1,090 + $2,380 + $610 + $960 + $118 = $8,372

Note what got stripped out: $8,330 of real spending that doesn’t qualify, most of it the pre-tax premiums and the HSA-paid prescriptions. Those aren’t disallowed because they’re not medical — they’re disallowed because they already got a tax break.

Step 2 — Calculate the floor: $92,000 × 7.5% = $6,900

Step 3 — Deductible amount: $8,372 − $6,900 = $1,472

Step 4 — Does itemizing win? This is the step people skip, and it’s usually the one that decides the outcome. Suppose their other itemized deductions are $9,400 of state and local taxes plus $7,800 of mortgage interest plus $1,200 of charitable giving = $18,400. Add the $1,472 medical and their itemized total is $19,872.

For tax year 2026 the standard deduction for a married couple filing jointly is $32,200. So this household — with $16,702 of real healthcare spending in a genuinely heavy year — takes the standard deduction and gets nothing from the medical deduction.

That is not a rigged example. It’s the ordinary outcome, and it’s the single most important thing to understand before you spend a weekend organising receipts. The medical deduction only produces money for households whose other itemized deductions are already close to the standard deduction — typically a substantial mortgage, high state and local taxes, or significant charitable giving — and who then have a heavy medical year on top.

Change one input and it flips. Give the same household $22,000 of mortgage interest instead of $7,800 and their itemized total becomes $34,072, beating the standard deduction by $1,872. Now the $1,472 of medical is doing real work: at their marginal rate — roughly 12% for a couple at this income level, though it depends on their taxable income after deductions — the medical portion is worth in the region of $175 of tax saved.

That’s the honest shape of it. A few hundred dollars, in a good year, for households already itemizing. Worth claiming when it’s there. Not worth reorganising your finances around.

The step everyone gets wrong

Look again at step one. The household spent $16,702 on healthcare and only $8,372 counted.

The two biggest exclusions weren’t obscure edge cases — they were the premiums and the HSA spending, which between them are most people’s largest healthcare outlays.

Premiums paid pre-tax through an employer payroll deduction don’t qualify, because they were never in your taxable income to begin with. You already got the benefit. Premiums paid with after-tax dollars — a marketplace plan you buy directly, for instance — can qualify.

HSA and FSA spending doesn’t qualify, for the same reason: the money went in pre-tax. Claiming it again on Schedule A would be a double benefit.

This is precisely why a medical tracker needs a payment source column. At tax time the question isn’t “what did we spend on healthcare” — it’s “what did we pay with after-tax money, unreimbursed.” Those are very different sums, and without the column you can only produce the wrong one.

What counts, roughly

Publication 502 is the authority and it’s long, but the shape of it:

Generally qualifies: doctor, dentist, surgeon, chiropractor and psychologist fees; hospital and nursing care; prescription medication and insulin; glasses, contacts and eye surgery; hearing aids; dentures and orthodontia; medically necessary equipment and home modifications; mileage to and from medical care at the applicable IRS medical mileage rate; certain long-term care and premiums paid with after-tax dollars.

Generally doesn’t: cosmetic surgery; non-prescription medicines other than insulin; vitamins and supplements taken for general health; gym memberships and most weight-loss programs unless prescribed for a specific diagnosed condition; toothpaste, toiletries and cosmetics; anything reimbursed by insurance, an HSA, an FSA or an employer.

Two frequently missed items worth knowing about: medical mileage — a per-mile deduction for driving to appointments — and expenses paid for a dependent, which can include a parent you support in some circumstances. Both are easy to overlook and both need a date-stamped log to substantiate.

The mileage rate deserves a note: it usually changes once a year, but not always. For 2026 the IRS made a rare midyear adjustment, raising the medical rate from 20.5 cents per mile for January–June to 23.5 cents for July–December. If you drove to appointments across both halves of the year, the two halves are deducted at different rates — which means your mileage log needs dates, not just a total.

Which date matters

The medical deduction runs on date paid, not date of service.

A procedure performed on 20 December 2026 and paid on 8 January 2027 is a 2027 deduction. This is the opposite of the rule for your deductible, which runs on date of service.

Two consequences worth acting on. First, your tracker needs both date columns — one column genuinely cannot answer both questions. Second, if you’re near the floor in December, the timing of when you pay outstanding bills can be a decision rather than an accident. A household at $6,100 against a $6,900 floor might pay January’s bills in December and clear it; a household at $2,000 might defer everything into next year and try to bunch expenses into a single year instead. Bunching is the only real lever the 7.5% floor leaves you.

Getting the number without a shoebox

The calculation is four steps. The hard part is producing a defensible figure for step one — qualified, unreimbursed, paid with after-tax money, in the right calendar year — from a year of scattered paperwork.

The Medical & Healthcare Expense Tracker has a Tax Deductions tab that does this: it takes your AGI, applies the 7.5% floor, and returns the deductible portion of the year’s expenses from the log automatically. Because the Medical Expense Log already captures date paid separately from date of service, and records what actually paid for each expense, the HSA-paid and pre-tax-premium exclusions come out correctly rather than being remembered — or not — in April.

The bottom line

Medical expenses are deductible only above 7.5% of your adjusted gross income, only if you itemize, and only for the portion you paid with after-tax dollars that nobody reimbursed. Premiums taken pre-tax through payroll and anything paid from an HSA or FSA are out — and for most households those are the two largest lines, which is why the qualifying total lands far below the total spent.

Run the four steps once with your real numbers, and run step four first if you want to save time: unless your other itemized deductions are already near the standard deduction, the answer is no regardless of how large your medical bills were. Then do qualified total, minus 7.5% of AGI, and see what’s left. If you’re close to the floor in December, bunching payments is the one lever available. And track date paid separately from date of service all year, because reconstructing which bills were settled in which calendar year, from memory, in April, is where this deduction usually dies.

For the full tracking system, see how to track medical expenses in a spreadsheet. If you’re also running an HSA, note that claiming an expense here rules out reimbursing it from the HSA later — mark it in your log the year you claim it.

General information, not tax advice. Qualifying expenses, floors and standard deduction amounts are set by the IRS and change; see Publication 502 or consult a tax professional for your situation.