The Medical Expense Deduction & tax reform – What’s changed?

Editor’s Note: This article was originally published on January 30, 2018, and updated in 2020.

What is the Medical Expense Deduction?

The medical expense deduction was created to help taxpayers with hefty medical expenses.

What were the rules around medical deductions pre-tax reform?

Here are the general rules for medical deductions before tax reform:

• Taxpayers who itemized could deduct qualified out-of-pocket medical expenses that were over 10% of their adjusted gross income for the year.
• Qualified costs included expenses paid for diagnosis, cure, mitigation, treatment, or prevention of disease, including dental costs.
• The costs must have been incurred for the taxpayer, the taxpayer’s spouse, or dependent.
• Taxpayers could only deduct medical expenses paid in the same tax year as the return.

What are the rules for the Medical Expense Deduction for 2019 tax returns?

The Tax Cuts and Jobs Acts (TCJA) preserved the deduction for medical expenses and changes the floor to 7.5% in 2017 and 2018.

What will the medical expense deduction be in 2019 and 2020? For 2019 and 2020 tax returns, the medical expense deduction floor remains at 7.5% due to an extension by the Taxpayer Certainty and Disaster Tax Relief Act of 2019.

What other medical expense tax reform impacts should taxpayers be aware of?

With medical expense deduction tax reform, some taxpayers who previously itemized will be better off taking the larger standard deduction, including taxpayers who can deduct medical expenses.

For an estimate of how the tax reform changes may affect your return, visit our tax refund and tax reform calculator. Keep in mind that this is an estimate – taxpayers should seek advice from a tax professional when trying to determine how the tax reform changes will affect their medical deductions.

Have questions about the medical expense deduction and tax reform?

If you have any questions about claiming the medical expense deduction, we can help. Our tax pros know all there is to know about taxes and can help with any questions you have about your tax deductions and credits. For more information, schedule an appointment with your nearest H&R Block tax professional.