If your out-of-pocket medical costs are more than 7.5% of your income, the IRS may let you deduct them on your taxes using Schedule A. This can save you hundreds or even thousands in taxes. Medical bills can stack up fast, and when they do, they don’t just hurt your wallet. They can hit your credit, too. The IRS gives you breathing room through tax deductions for medical expense.
In this guide, we break down how medical expense tax deductions actually work, what qualifies, and how you could save serious money just by knowing the rules.
Medical bills piling up? Credit score taking hits from medical collection calls?
It happens more often than you think. One unexpected surgery, a trip to the ER, or a stack of insurance copays, and suddenly you’re in the red.
But what most people don’t realize is that the IRS actually lets you deduct qualifying medical expenses from your taxes.
And if you play it smart, it could put thousands back in your pocket.
Why Medical Debt Hits So Hard
Medical emergencies don't care about your budget. One hospital visit can cost more than most people make in months.
Unlike credit card debt, medical bills come without warning:
- Emergency room visits
- Unexpected surgeries
- Chronic condition management
- Prescription medications
The worst part? Medical debt doesn't just disappear. It grows. Interest adds up. Collection agencies start calling. Your credit score drops.
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How Medical Debt Ruins Your Credit
Here's what happens when you can't pay medical bills:
90-180 days: Medical providers send your account to collections
After collections: The debt shows up on your credit report
For 7 years: That collection account stays on your report
Collection calls are relentless. They can contact you multiple times per day. The stress makes everything worse when you're already dealing with health issues.
“Once it went to collections, I started getting calls every day. My credit score dropped 60 points and I was denied for a personal loan.”
— u/RedditUser123, sharing how medical debt destroyed their finances
That’s where the IRS medical-expense deduction comes in, it might not erase the debt, but it can help give you back some breathing room on your taxes, easing your overall burden.
What Are IRS Medical Expense Deductions?
The IRS lets you deduct medical expenses that cost more than 7.5% of your income.
Here's how it works:
- Your income: $50,000
- 7.5% threshold: $3,750
- Medical expenses: $8,000
- You can deduct: $4,250
That $4,250 deduction could save you $1,000+ in taxes, depending on your tax bracket.
Recommended Read: Medical Revenue Service: Complete Consumer Guide 2025
IRS Medical Deduction Rules 2024 (What’s Changed?)
Here’s the deal: You can deduct qualified medical expenses that go over 7.5% of your adjusted gross income (AGI). That rule hasn’t changed in 2024, but with rising healthcare costs, more people are hitting that threshold than ever before.
So yeah, your medical bills might finally work in your favor (for once).
Example: If your AGI is $50,000, you can only deduct the portion of your medical expenses that goes over $3,750.
Can I Write Off My Hospital Bills on Taxes?
Short answer: Yes, if they weren’t reimbursed by insurance.
That includes:
- ER visits
- Hospital stays
- Surgery
- Blood tests, X-rays, MRIs
- Follow-up care
But you can’t deduct anything your insurance covers. That part doesn’t count.
What Medical Expenses Can You Deduct?
Medical costs can add up fast, good thing you can deduct a lot from tax savings. From doctor visits and prescriptions to mental health services and even transportation, the IRS allows deductions for a wide range of medical expenses you might not expect.
Here’s a quick checklist to help you see what you can claim.
Plus, There Are Hidden Medical Deductions Most People Miss
- Home Modifications for Medical Needs: Installing ramps, grab bars, or wider doorways for medical conditions counts as a deductible expense.
- Special Education Costs: Tutoring and special schooling for learning disabilities qualify as medical expenses.
- Weight Loss Programs: If your doctor prescribes a weight loss program for a specific condition, it's deductible.
- Smoking Cessation: Programs to quit smoking, including nicotine patches and prescription medications.
- Service Animals: Buying, training, and caring for guide dogs or medical service animals.
- Medical Conferences: Registration and travel costs for conferences about your chronic condition.
Tax Write-Offs for Surgery Costs: What Qualifies?
Elective surgeries like cosmetic procedures generally don’t qualify, unless they’re medically necessary.
Here’s what is deductible:
- Appendix or gallbladder surgery
- Orthopedic surgery (e.g. knee replacement)
- Heart bypass or pacemaker implantation
- Cancer-related surgeries
- Medically necessary reconstructive procedures
IRS Tip: Use Form 1040 Schedule A, and consult a tax pro if you're unsure about a surgery's qualification.
Payment Plans and Tax Deductions
Good news: You can deduct the full medical expense in the year you received treatment. Even if you're on a payment plan.
Bad news: Interest on medical debt isn't deductible as a medical expense.
Health Savings Accounts (HSAs) and Deductions
You can't double-dip. If you pay medical expenses with HSA money, you can't also deduct those expenses.
But HSAs are still valuable:
- Contributions reduce your taxable income
- Money grows tax-free
- Withdrawals for medical expenses are tax-free
When to Get Professional Help
Consider hiring a tax professional if you have:
- Medical expenses over $10,000
- Complex medical situations
- Multiple family members with medical needs
- Questions about what qualifies
The cost of professional help often pays for itself through additional deductions you might miss.
Related Article: How to Keep Medical Debt Out of Collections After an Accident
Beyond Tax Deductions: Other Medical Debt Relief
Tax deductions help, but they're not your only option:
- Hospital Financial Assistance Most hospitals offer charity care or payment plans. Ask the billing department about assistance programs.
- Medical Bill Negotiation
Many providers will reduce bills if you ask. Offer to pay a lump sum for a discount. - Non-Profit Help Organizations Groups like RIP Medical Debt and local charities sometimes pay off medical bills for qualifying families.
- State Programs Some states have medical debt relief programs. Check your state's health department website.
How to Actually Apply for These Tax Deductions
Here's the part most articles skip: how to get these deductions on your tax return.
You can't just write "medical expenses" on your tax form and hope for the best. There's a specific process.
You Must Itemize Your Deductions
First, you need to choose between:
- Standard deduction ($13,850 for single filers in 2023)
- Itemized deductions (medical + other deductions)
Only choose itemized if your total itemized deductions exceed the standard deduction.
Use IRS Schedule A (Form 1040)
This is where you actually claim medical expense deductions:
- Line 1: Enter your total medical expenses
- Line 2: Enter your adjusted gross income (AGI)
- Line 3: Multiply AGI by 7.5% (0.075)
- Line 4: Subtract line 3 from line 1
The number on line 4 is your medical expense deduction.
What Documents You Need
The IRS doesn't require you to send receipts with your return. But keep everything in case of an audit:
- All medical receipts and bills
- Insurance statements showing what you paid
- Mileage logs for medical trips
- Bank statements showing medical payments
- Credit card statements for medical expenses
Step-by-Step: How to File Your Medical Deductions
Step 1: Gather All Your Medical Records.
Collect receipts, bills, and statements from:
- January 1 to December 31 of the tax year
- All family members you claim as dependents
- Insurance statements showing your out-of-pocket costs
Step 2: Calculate Your AGI Threshold
Find your Adjusted Gross Income (AGI) from your tax return. Multiply by 0.075.
Example: $60,000 AGI × 0.075 = $4,500 threshold
Step 3: Add Up All Qualifying Medical Expenses
Use this checklist:
- ☐ Doctor visits and hospital bills
- ☐ Prescription medications
- ☐ Medical equipment and supplies
- ☐ Dental and vision care
- ☐ Mental health services
- ☐ Medical transportation (mileage × $0.22)
- ☐ Insurance premiums (if not employer-covered)
Step 4: Check if You Qualify
Total medical expenses - AGI threshold = Your deduction
Using our example: $8,000 medical expenses - $4,500 threshold = $3,500 deduction
Step 5: Decide Whether to Itemize
Add your medical deduction to other itemized deductions:
- State and local taxes (up to $10,000)
- Mortgage interest
- Charitable donations
If the total exceeds the standard deduction, itemize.
Step 6: Complete Schedule A
Fill out IRS Schedule A, Part A (Medical and Dental Expenses):
- Line 1: Total medical expenses
- Line 2: AGI from Form 1040
- Line 3: AGI × 7.5%
- Line 4: Line 1 minus Line 3 (your deduction)
Step 7: File Your Return
Attach Schedule A to your Form 1040.
Summary of How to Deduct Out-of-Pocket Medical Expenses
If you paid medical costs out-of-pocket, you can claim the entire amount in the year treatment occurred, even if you’re still making payments.
Steps to deduct out-of-pocket medical expenses:
- Track every receipt and invoice for non-reimbursed payments.
- Add medical mileage, parking fees, and insurance premiums.
- Calculate your 7.5% AGI threshold.
- Subtract the threshold from your total medical costs.
- Report on Schedule A of your 1040 tax return.
Why People Miss Out on Medical Deductions
They don't know they have to itemize. Many people assume they can take medical deductions AND the standard deduction. You can only pick one.
They think the threshold is too high. Yes, 7.5% sounds like a lot. But medical expenses add up faster than you think.
They don't track expenses during the year. By tax time, they've lost receipts and forgotten about expenses.
They only count big bills. Small expenses like prescription co-pays and medical mileage count too.
What Happens If You Get Audited?
The IRS audits about 0.6% of returns. Medical deduction audits focus on:
Proving expenses are legitimate medical costs
Keep receipts that clearly show:
- Date of service
- Medical provider name
- Amount paid
- Type of service
Proving you actually paid
Bank statements, canceled checks, or credit card statements work.
Proving expenses weren't reimbursed
Insurance statements showing what you paid out-of-pocket.
Pro Tip: Organize everything by month in a folder. Makes audits much easier.
Wait — What About the New Rule for Medical Debt Under $500?
Here’s what changed: As of 2025, Equifax, Experian, and TransUnion, the three big credit bureaus, stopped reporting medical debt under $500 on credit reports. They also removed medical debt over $500 if it’s less than one year old.
But why?
It wasn’t actually because of a new federal law. It was part of a voluntary move by the credit bureaus in response to growing pressure from consumer advocacy groups, lawmakers, and the CFPB (Consumer Financial Protection Bureau).
The goal?
To reduce the long-term damage caused by small or temporary medical bills — especially those that should’ve been covered by insurance in the first place.
A real user on Reddit asked:
“Can they bundle multiple under-$500 bills to report a higher total? Like 3 separate $300 bills from the same doctor, can they add that up to $900 and report it?” Source
Great question. but no, they can’t. Each bill is reviewed separately. If any one bill is under $500, it’s excluded from your credit report.
So, if your report still shows a medical collection under $500, that’s outdated, and disputable.
The Bottom Line
If you haven’t checked your credit or tax deductions lately, now’s the time. Medical debt doesn't have to destroy your finances. The IRS medical expense deduction can put money back in your pocket.
Go over your medical receipts. Run the numbers. You might be sitting on a tax deduction worth thousands.
Every dollar you deduct reduces your tax bill. If you're in the 22% tax bracket, a $5,000 deduction saves you $1,100.
That's real money you can use to:
- Pay down more medical debt
- Build an emergency fund
- Get back on your feet financially
Medical debt is overwhelming, but you have options. Start with understanding your tax deductions, then explore other relief programs. Take it one step at a time, and you'll regain control of your finances.
Need help dealing with medical debt or improving your credit health?
ASAP Credit Repair can help. We provide support, and expert guidance to take back control of your finances, one smart move at a time.
Medical Deduction FAQs Most People Miss
Q: Can I deduct hospital stays and surgeries on my 2024 taxes?
A: Yes. As long as the costs were not reimbursed by insurance and exceed 7.5% of your AGI, you can claim them under itemized deductions on Schedule A.
Q: How much of my surgery cost is deductible?
A: Only the amount exceeding 7.5% of your income is deductible. If you earn $60,000, your threshold is $4,500, anything beyond that can be claimed.
Q: Can I deduct medical debt from collections?
A: Yes , but only the original medical expense amount.
If the bill went to collections and you still paid it, you can deduct the amount you paid out-of-pocket for the original medical service, not any late fees or interest added by the collection agency.
Important: You must have documentation showing the original date of service and that the expense was unreimbursed by insurance.
Q: What if I used a credit card to pay medical bills?
A: You can still deduct those costs.
If you charged qualified medical expenses on a credit card, the full amount is deductible in the year of the charge, not when you pay the credit card bill off.
“As long as the charge was for an IRS-approved medical expense and wasn't reimbursed, it counts."- Astrid, ASAP Credit Repair Expert
Q: Does IRS debt forgiveness apply to medical bills?
A: No, IRS debt forgiveness only applies to federal tax debt, not personal medical bills.
But the IRS does offer deductions on qualifying medical expenses, which can lower your tax bill and free up money to manage medical debt.
“Medical bill forgiveness usually comes from hospitals, non-profits, or state aid — not the IRS” - Astrid, ASAP Credit Repair Expert
Q: Can I get medical debt removed if I’m low income?
A: Yes, but not through the IRS.
Many hospitals have charity care or financial assistance programs for low-income patients. If approved, they may reduce or erase your medical debt.
Also, non-profits like RIP Medical Debt sometimes buy and forgive debt for qualified individuals.
Tip: If you qualify for Medicaid or other state programs, your past medical bills may be eligible for retroactive coverage.
Q: Are cosmetic procedures tax-deductible?
A: No, unless they are medically necessary due to trauma, disease, or congenital defects.
Q: What's the threshold for medical expense deductions?
A: 7.5% of your adjusted gross income.
Q: Can I deduct medical expenses for my family?
A: Yes, for your spouse and any dependents.
Q: Do I need to itemize to claim medical deductions?
A: Yes, you must itemize deductions instead of taking the standard deduction.
Q: Can I deduct health insurance premiums?
A: Yes, if you're not covered by an employer plan or if you're self-employed.
Q: What if I'm on a payment plan for medical bills?
A: You can deduct the full amount in the year you received treatment.
Disclaimer: This content is for general informational purposes only and does not constitute tax, legal, or financial advice. Individual tax and medical debt situations can vary. Not all deductions apply to every taxpayer. For personalized guidance, consult a professional.