Healthcare and Medical Expense Deductions in 2026: What Taxpayers Should Prepare For

Overview

Medical and healthcare expenses are among the largest out-of-pocket costs for many households. The IRS allows taxpayers to deduct qualified medical expenses that exceed a percentage of adjusted gross income (AGI), provided they itemize deductions. With expected changes to standard deductions and itemization rules in 2026, medical expense deductions may become more valuable.

Current Medical Expense Deduction Rules

• Taxpayers may deduct qualified medical expenses exceeding 7.5% of AGI

• Deduction is available only to itemizers

• Expenses must be paid during the tax year

• Costs may be paid for the taxpayer, spouse, or dependents

Eligible expenses include doctor visits, hospital care, prescription medications, dental treatment, vision care, and certain insurance premiums.

What Could Change in 2026

While the 7.5% AGI threshold is currently permanent, changes in related tax provisions may:

• Increase the number of taxpayers who itemize

• Raise the value of medical deductions due to lower standard deductions

• Encourage bundling of medical expenses into a single tax year

Healthcare-related deductions may become a more effective tax-planning tool.

Who Benefits Most

• Taxpayers with high medical costs

• Seniors and retirees with ongoing healthcare needs

• Families with special medical circumstances

• Self-employed individuals deducting health insurance premiums

Planning Strategies Before 2026

1. Bundle Medical Expenses
   Schedule elective procedures or treatments within one year to exceed the AGI threshold.

2. Track All Eligible Expenses
   Transportation, mileage, lodging, and medical equipment may qualify.

3. Coordinate With Itemized Deductions
   Combine medical costs with charitable giving, mortgage interest, and SALT deductions.

4. Use Health Savings Accounts (HSAs)
   HSAs offer triple tax benefits and can complement itemized deductions.

5. Review Insurance Premium Deductions
   Self-employed taxpayers may deduct premiums even without itemizing.

Impact on Seniors and Retirees

Medical deductions often play a larger role for retirees with fixed incomes. Coordinating retirement withdrawals and healthcare expenses can help minimize overall tax exposure while preserving cash flow.

Conclusion

Healthcare and medical expense deductions may become more valuable in 2026 as tax rules shift. By tracking expenses, bundling costs, and coordinating deductions strategically, taxpayers can reduce taxable income and manage healthcare expenses more effectively.