How are medical expenses treated for tax purposes?

Medical expenses are treated as deductible on your federal income tax return if they exceed a certain threshold of your adjusted gross income (AGI). Since 2021, the threshold for deducting qualified medical expenses is 7.5% of AGI for all taxpayers. This means that taxpayers can deduct the total qualified medical expenses that exceed that percentage of their AGI.

For example, if your AGI is $50,000, you can deduct medical expenses that exceed $3,750 (which is 7.5% of $50,000). This deduction is beneficial for taxpayers who incur significant out-of-pocket medical costs, as it helps reduce taxable income.

The other options do not accurately reflect tax law regarding medical expenses. For instance, medical expenses would not be fully deductible regardless of income level, as taxpayers must exceed the AGI threshold. Additionally, the deductibility of medical expenses isn't limited to only uninsured expenses; rather, it includes both insured and uninsured costs as long as they meet the necessary criteria and exceed the threshold. Lastly, medical expenses are indeed deductible under the right circumstances, making the assertion that they are not deductible at all inaccurate.