How to Deduct Medical Expenses on Your 2025 Taxes: Step-by-Step Guide

 

Medical expenses can take a significant portion of your budget, and thankfully, the tax code allows certain healthcare costs to be deducted. Understanding how to claim these deductions in 2025 can help you save money and reduce your taxable income. This step-by-step guide walks you through what medical expenses are deductible, the rules for claiming them, and tips for maximizing your tax benefits.

💡 What Medical Expenses Are Tax-Deductible in 2025?

The IRS allows taxpayers to deduct medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI). Only qualified expenses that are necessary for the diagnosis, treatment, or prevention of disease are eligible. Some common deductible expenses include:

• Health insurance premiums (if not paid with pre-tax dollars)
• Prescription medications and insulin
• Medical procedures, surgeries, and hospital services
• Doctor and dentist visits
• Long-term care and nursing home costs
• Medical devices and equipment such as wheelchairs, hearing aids, and crutches
• Mental health treatment and therapy

Non-deductible expenses include cosmetic procedures (unless medically necessary), over-the-counter medications, and general wellness expenses like gym memberships.

🧾 Step 1: Organize Your Medical Expenses

Start by compiling all medical expense receipts and statements for 2025. This includes:

• Doctor and hospital bills
• Pharmacy receipts
• Insurance statements showing premiums paid
• Payments for medical devices or long-term care

Keeping digital or physical copies will make it easier to calculate your total medical expenses and support your deductions in case of an audit.

🧾 Step 2: Determine Your Adjusted Gross Income (AGI)

Your AGI is your total income minus certain deductions, such as retirement contributions or student loan interest. This figure is important because only the portion of your medical expenses that exceeds 7.5% of your AGI is deductible.

Example:

• AGI: $60,000
• 7.5% of AGI: $4,500
• Total medical expenses: $8,000
• Deductible amount: $8,000 – $4,500 = $3,500

🧾 Step 3: Complete IRS Schedule A

Medical expense deductions are reported on Schedule A (Itemized Deductions) of your federal tax return:

1. Enter your total medical expenses on Line 1 of Schedule A.
2. Enter your AGI and calculate 7.5% of AGI.
3. Subtract 7.5% of AGI from your total medical expenses to find the deductible portion.
4. Add any other itemized deductions (mortgage interest, state taxes, charitable donations) to complete Schedule A.

🧾 Step 4: Include Premiums for Health Insurance

If you pay out-of-pocket health insurance premiums (not through an employer plan or pre-tax deduction), they count toward your medical expenses. This includes:

• ACA marketplace premiums
• Medicare Part B and Part D premiums
• Long-term care insurance premiums (subject to age-based limits)

Ensure you include these premiums in your total medical expense calculations.

🧾 Step 5: Deduct Other Eligible Medical Costs

Other qualifying costs include:

• Transportation and travel expenses for medical care (mileage, parking, tolls)
• Home modifications required for medical purposes (wheelchair ramps, handrails)
• Special diets prescribed by a doctor for medical conditions

Keep documentation for all expenses to substantiate your deductions.

🧾 Step 6: Claim the Deduction on Your Tax Return

After calculating your deductible medical expenses on Schedule A:

1. Transfer the total from Schedule A to Form 1040, Line 12 (or the relevant line on your federal tax return).
2. Ensure you itemize deductions; you cannot claim medical expenses if you take the standard deduction.

Tip: If your total itemized deductions, including medical expenses, do not exceed the standard deduction, it may not be worth itemizing. For 2025, the standard deduction is expected to be:

• $14,000 for single filers
• $28,000 for married filing jointly
• $21,000 for head of household

💡 Tips to Maximize Your Medical Expense Deduction

1. Track Everything: Save receipts for all medical-related spending throughout the year.
2. Use HSAs and FSAs Wisely: Contributions reduce taxable income, but only out-of-pocket expenses paid with after-tax dollars count for itemized deductions.
3. Bundle Medical Expenses: If possible, pay for multiple medical expenses in the same tax year to exceed the 7.5% AGI threshold.
4. Include Dependents’ Medical Expenses: Expenses you pay for qualifying dependents can be included in your deduction.
5. Consult a Tax Professional: Complex situations, such as mixed employer benefits, long-term care, or large medical expenses, may benefit from professional guidance.

📌 Final Thoughts

Medical expenses can be a major financial burden, but the 2025 tax code provides opportunities to reduce your taxable income through careful planning. By keeping accurate records, understanding what qualifies, and strategically timing payments, you can maximize your medical expense deduction.

A well-organized approach to medical deductions ensures you save money while staying compliant with IRS regulations, giving you peace of mind during tax season.