Expert reveals which health care costs are tax-deductible | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Health care costs can add up quickly, and some of those expenses may qualify for valuable tax deductions.

The average American adult pays roughly $1,200 per year in out-of-pocket medical expenses alone, according to the 2025 Milliman Medical Index. Total health care costs for a family of four now exceed $35,000 annually through employer-sponsored plans, also according to Milliman analysis.

Yet most people never claim a single dollar of those costs on their taxes, because the rules around medical deductions feel too confusing to navigate. The reality is that a wide range of expenses qualify for tax relief, from prescription drugs and insurance premiums to mental health treatment and even certain weight-loss medications.

The catch is that the IRS has built a system with multiple thresholds, account types, and eligibility traps that trip up even careful filers. Here is exactly what qualifies, what does not, and how you can keep more of the money you are already spending on your health.

The IRS requires you to clear two hurdles before deducting medical costs

You cannot simply list your medical bills on your tax return and expect the IRS to hand you a deduction for the full amount.

The agency has structured two separate barriers that you must clear before receiving any tax benefit from your health care spending.

Hurdle 1: Unreimbursed costs must exceed 7.5% of income

The first barrier is the adjusted gross income threshold, which eliminates small claims from qualifying for any deduction on your return. You can only deduct unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income, according to IRS Publication 502.

If your AGI is $80,000, the first $6,000 in medical expenses provides absolutely zero tax benefit to you on your federal return. Only expenses exceeding the $6,000 threshold count toward the deduction, meaning you need substantial medical costs to benefit.

Hurdle 2: Itemized deductions must beat the standard deduction

Even after clearing the 7.5% threshold, you still need your total itemized deductions to exceed the standard deduction for your filing status. The 2025 standard deduction is $15,750 for single filers and $31,500 for married couples filing jointly, according to the IRS.

“All too often, people don’t understand how income tax is calculated, and that it’s a progressive tax rate structure,” said Caroline Bruckner, managing director of the Kogod Tax Policy Center. “And I don’t mean progressive in the political sense, but I mean the more income you make, the more tax you pay.”

Your itemized deductions include medical expenses, state and local taxes capped at $10,000, mortgage interest, and charitable contributions. If that total falls below your standard deduction amount, you receive no medical expense deduction, regardless of your health care spending.

Health insurance premiums can qualify as deductible under specific conditions

Your health insurance premiums may count toward your medical expense deduction, but only if you pay them with after-tax dollars from your paycheck. Premiums paid through an employer’s pre-tax cafeteria plan or Section 125 arrangement do not qualify because those dollars were never taxed.

Out-of-pocket premiums you pay directly for medical, dental, and vision insurance can be added to your total deductible medical expenses. Medicare Part B and Part D premiums that are deducted from your Social Security benefits also qualify for the deduction, according to IRS Publication 502.

Self-employed individuals get a separate advantage here that salaried workers do not receive from the standard deduction calculation. If you are self-employed and earned a net profit, you can deduct your health insurance premiums as an above-the-line adjustment to income.

HSAs and FSAs both reduce your healthcare tax burden in different ways

Tax-advantaged savings accounts offer an alternative way to reduce your medical costs, especially if you cannot meet the itemizing threshold. You do not need to itemize deductions to benefit from either a Health Savings Account or a Flexible Spending Account on your taxes.

Health Savings Accounts let your unused medical dollars grow tax-free over time

An HSA allows you to set aside pre-tax dollars from your paycheck to cover qualified medical expenses throughout the current tax year. For 2025, the IRS lets individuals contribute up to $4,300 and families up to $8,550, according to IRS Publication 969.

The real advantage of an HSA is that unused funds roll over indefinitely and can grow through investments completely free of federal taxes. Your contributions reduce your taxable income, your growth is tax-free, and your withdrawals for qualified medical expenses are also tax-free.

You must be enrolled in a high-deductible health plan to qualify, which means a minimum annual deductible of $1,650 for individual coverage. Those 55 and older can contribute an additional $1,000 per year as a catch-up contribution, according to the IRS.

Health Savings Accounts offer triple tax advantages, letting medical funds grow tax-free while reducing income and covering qualified health care expenses over time.

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Flexible Spending Accounts have lower limits and a strict use-it-or-lose-it deadline

An FSA lets you set aside up to $3,300 in pre-tax dollars for 2025 to pay for qualified out-of-pocket medical expenses during the year. The contribution limit rises to $3,400 for 2026 plan years, according to the IRS announcement in Revenue Procedure 2025-32.

The critical difference is that FSA funds generally do not roll over to the next year, which creates a real financial risk. Some employers allow a grace period of a few months or a carryover of up to $660 into the following plan year.

You should only put money into an FSA if you are confident you will spend that amount on qualifying medical expenses within the year. Bruckner warns that you need predictable out-of-pocket costs to benefit.

Weight-loss medications such as Ozempic may be deductible with a medical diagnosis

Roughly 12% of American adults are now taking GLP-1 drugs such as Ozempic, Wegovy, or Zepbound for weight loss or chronic conditions, according to Gallup.

These medications can cost hundreds or even thousands of dollars per month, which makes the tax question especially important for your finances.

More Health Care:

The IRS will generally allow you to deduct the cost of weight-loss drugs if a doctor prescribed them to treat a specific medical condition. Qualifying conditions include type 2 diabetes, obesity diagnosed by a physician, heart disease, and hypertension, Bruckner explains.

If you are taking these medications purely for cosmetic weight loss without a documented medical diagnosis, the IRS will not allow that deduction. The same two hurdles apply here, too, meaning your total unreimbursed medical expenses must still exceed 7.5% of your AGI.

You can also use HSA or FSA funds for prescribed weight-loss medications

If you cannot meet the itemization threshold, you may still be able to pay for prescription weight-loss drugs through your HSA or FSA. This effectively gives you a tax break on those costs without needing to itemize, which is a practical alternative for many taxpayers.

Gym memberships, fitness trackers, and nutritionist fees face strict IRS limits

The IRS draws a hard line between expenses that treat a diagnosed medical condition and those that simply promote general health improvement. Understanding where that line falls can save you from claiming deductions the IRS will reject on your tax return.

Gym memberships are almost never deductible under current IRS rules

Your monthly gym membership will not qualify as a medical expense deduction under most circumstances, regardless of how health-focused your routine is. The IRS considers gym memberships a general wellness expense rather than a treatment for a specific diagnosed medical condition, Bruckner explains.

Fitness devices such as the Apple Watch or the Oura Ring require a letter of medical necessity

Health-focused wearable devices such as Fitbit trackers, Apple Watches, and Oura Rings are generally not deductible as medical expenses on your federal return. You may be able to get reimbursed through your HSA or FSA if you can secure a letter of medical necessity from your physician.

Bruckner recommends checking the IRS.gov website to determine whether your specific device and medical circumstances would qualify for any tax benefit. The key factor is whether a doctor prescribed the device to monitor or treat a diagnosed condition rather than general fitness.

Nutritionist costs depend entirely on whether a medical diagnosis is involved

Fees you pay to a nutritionist or dietitian may be deductible if a doctor referred you for treatment of a specific medical condition. Qualifying conditions could include diabetes management, heart disease, or physician-diagnosed eating disorders that require professional dietary intervention.

Visits to a nutritionist for general weight loss or appearance improvement without a specific medical diagnosis will not qualify for the deduction. The IRS requires a clear connection between the expense and a diagnosed medical condition to allow any nutritionist-related tax benefit.

Mental health care costs are fully deductible when they meet the standard requirements

Payments to psychologists, psychiatrists, psychoanalysts, and licensed therapists qualify as deductible medical expenses for you and your dependents on your return. Mental health treatment receives the same tax treatment as physical health care under IRS rules, Bruckner confirms.

This includes therapy for anxiety, depression, PTSD, substance abuse treatment, and other diagnosed mental health conditions you are actively treating. The same 7.5% AGI threshold and itemizing requirements apply, so you need to track these costs alongside all other medical expenses.

If your mental health costs alone do not push you past the threshold, combining them with other qualified medical expenses may get you there. Prescription medications for mental health conditions, copays for therapy sessions, and transportation to appointments all count toward the total.

How to position yourself for the largest possible medical expense tax benefit

Clearing the 7.5% AGI threshold and the standard deduction barrier requires intentional planning throughout the tax year rather than last-minute scrambling. Several proven strategies can help you maximize the tax benefit from health care costs you will already incur this year.

Key strategies to consider:

Bundle elective procedures, dental work, and vision expenses into a single tax year so your total exceeds the 7.5% threshold.
Track every qualifying expense meticulously, including mileage to medical appointments at $0.21 per mile for 2025, parking fees, and prescription copays.
Contribute the maximum allowed to your HSA before the April tax filing deadline, since HSA contributions reduce your AGI and lower the threshold.
Review whether filing separately could benefit you if one spouse has significantly higher medical expenses relative to their individual income.
Keep all receipts, explanation-of-benefits statements, and pharmacy records organized in case the IRS questions your deduction claims on audit.

The standard deduction is high enough that most Americans will not benefit from itemizing their medical expenses in any given tax year. About 88% of taxpayers have taken the standard deduction in recent years, so the medical expense deduction works best for those with unusually large medical bills.

If your costs are too low to itemize, an HSA remains your most powerful tool because it provides an above-the-line tax benefit with no itemizing required. Maximizing your HSA contribution should be your first priority if you are enrolled in a qualifying high-deductible health plan this year.