Can You Write Off Prescriptions on Taxes?
Writing off prescriptions involves specific tax rules. Understand how your total healthcare spending can potentially lead to a valuable deduction.
It is possible to write off the cost of prescriptions on your taxes. The Internal Revenue Service (IRS) allows taxpayers to deduct the amount they spend on prescription medications as part of a broader medical expense deduction. This deduction, however, is subject to specific financial thresholds and reporting requirements.
Claiming this deduction depends on your total amount of medical spending and your income level for the year. Simply having prescription costs does not automatically qualify you for a tax write-off. The rules are designed to limit the deduction to those with significant healthcare expenses relative to their income.
The AGI Threshold for Medical Deductions
To deduct medical expenses, including prescriptions, you must meet two conditions. The first is the choice between taking the standard deduction or itemizing your deductions. The medical expense deduction is an itemized deduction, meaning you can only claim it if you choose not to take the standard deduction.
For itemizing to be beneficial, your total itemized deductions must be greater than your available standard deduction amount. Itemized deductions include not only medical expenses but also things like state and local taxes, home mortgage interest, and charitable contributions. If the sum of all your itemized deductions is less than the standard deduction, you will receive a larger tax benefit by taking the standard deduction and will not be able to write off your prescription costs.
The second condition is the Adjusted Gross Income (AGI) threshold. Your AGI is your gross income minus certain specific adjustments, and it is a key figure on your tax return. The IRS only allows you to deduct the amount of total unreimbursed medical expenses that exceeds 7.5% of your AGI. This rule means the first 7.5% of your medical spending provides no tax benefit.
Identifying Qualifying Medical Expenses
To clear the 7.5% AGI threshold, you should total all of your eligible medical costs for the year, not just prescription expenses. A qualifying medical expense includes costs for the diagnosis, cure, mitigation, treatment, or prevention of disease. For prescriptions, this specifically covers drugs and medicines prescribed by a doctor.
Certain health-related purchases are not considered qualifying medical expenses. You generally cannot deduct the cost of nonprescription drugs and medicines. The only exception for a nonprescription medicine is insulin, which is a deductible expense. Expenses that are merely for general health, such as vitamins or nutritional supplements, are also not deductible. Any expense for which you were reimbursed by insurance or another source cannot be included in your total.
Because the 7.5% threshold can be difficult to meet with prescription costs alone, you should compile a comprehensive list of all unreimbursed medical payments. These can include:
- Payments made to doctors, dentists, surgeons, chiropractors, and psychologists
- The costs of hospital care, including inpatient meals and lodging
- Payments for eyeglasses, contact lenses, and hearing aids
- Dental treatments like braces
Transportation costs to and from medical care are another expense. This includes the actual cost of bus fare, ambulance services, or a standard mileage rate for using your personal vehicle, which was 21 cents per mile for the 2024 tax year. Keeping records, such as receipts, pharmacy printouts, and mileage logs, is needed to substantiate these expenses. Proper documentation is needed in case the IRS audits your return.
How to Calculate and Claim the Deduction
Once you have determined that itemizing deductions is advantageous and have gathered all your unreimbursed medical expense documentation, the calculation process is straightforward. The first action is to sum up all your qualifying medical expenses for the tax year. This total should include everything from prescription drug copayments to the cost of medical-related travel.
Next, you will need to locate your Adjusted Gross Income on your tax return. Your AGI is calculated on the first page of Form 1040. Multiply your AGI by 7.5% (or 0.075) to find the portion of your medical expenses that you are not permitted to deduct.
Subtract the 7.5% AGI threshold amount you just calculated from your total qualifying medical expenses. If the result is a positive number, that is the amount you are eligible to deduct. For example, with an AGI of $80,000 and total medical expenses of $10,000, your threshold is $6,000 ($80,000 x 0.075). Your deduction would be $4,000 ($10,000 – $6,000).
This final deductible amount is then reported on Schedule A (Form 1040), Itemized Deductions. This total is then transferred to your Form 1040, reducing your overall taxable income. The Schedule A must be filed with your main tax return.