Medical Expenses Retirees (and Others) Can Deduct on Their Taxes

The list of medical deductions is broad and includes items such as expenses for service animals and the cost of long-term care.

A patient chats with a doctor.
(Image credit: Getty Images)

Individuals with big medical bills got a tax win in late 2020. Taxpayers who itemize on Schedule A (opens in new tab) can continue to deduct qualifying medical expenses to the extent that the total amount exceeds 7.5% of adjusted gross income. The AGI threshold was scheduled to climb to 10% beginning in 2021, but instead, Congress permanently kept the 7.5% threshold.

You can claim medical expenses that are not reimbursed by insurance for yourself, a spouse and your dependents. To qualify as a deduction, the expense must be incurred primarily to alleviate or prevent a physical or mental disability or illness.

The broad list of eligible expenses includes out-of-pocket payments for medical services rendered by doctors, dentists, optometrists and other medical practitioners; mental health services; health insurance premiums (including Medicare Parts B and D); annual physicals; prescription drugs and insulin (but not over-the-counter drugs); hearing aids; and transportation to and from the doctor’s office. But cosmetic surgery to improve your general appearance, hair transplants and teeth whitening are not eligible. For more information, about what qualifies, see IRS Publication 502 (opens in new tab).

Joy Taylor
Editor, The Kiplinger Tax Letter

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to kiplinger.com and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.