Final Tax Bill Expands Medical Deductions

Federal law allowed families with medical expenses exceeding 10 percent of their adjusted gross incomes to deduct certain medical expenses from their income taxes, provided that they itemize their deductions. For the two months leading up to passage of the new tax bill, the entire future of the deduction was in doubt. The version of the tax bill that the House of Representatives passed November 16, 2017, would have scrapped the deduction altogether, prompting an outcry from disability rights advocates.  The Senate version, however, maintained the deduction.

The final version, in fact, expands the number of families eligible for the deduction, at least temporarily.  For the current 2017 tax year and 2018, all families whose medical expenses exceed 7.5 percent of their adjusted gross income will have the option of deducting certain medical expenses. The threshold will, however, revert back to 10 percent for the 2019 tax year.

This 7.5 percent benchmark mirrors regulations that existed prior to the Affordable Care Act (ACA), which had raised it to 10 percent for non-elderly families. For the elderly, the 7.5 percent threshold expired in 2016 and also rose to 10 percent.  According to the IRS, 8.8 million households, or almost 6 percent of tax filers, claimed medical deductions in 2015.

 

 

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