Is Durable Medical Equipment Tax Deductible?

The cost of durable medical equipment (DME) can be a financial burden, but under specific Internal Revenue Service (IRS) rules, these expenses may be tax-deductible. DME is equipment prescribed by a physician for a medical purpose that can withstand repeated use. To claim this deduction, the equipment must be a medical necessity, and the taxpayer must meet certain financial thresholds.

Defining a Qualifying Medical Expense

The IRS defines medical care expenses as payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, or for treatments affecting any part of the body. For durable medical equipment to be included, it must be a medical necessity used to alleviate or prevent an illness, not just something beneficial to general health.

Common examples of qualifying equipment include wheelchairs, crutches, hospital beds, oxygen and related equipment, blood sugar test kits, and prosthetic limbs. A doctor’s prescription is strong evidence that the equipment’s main purpose is medical care and is often a determining factor.

An air conditioner, for instance, is usually a personal expense; however, if a doctor prescribes it for a patient with a chronic respiratory illness to relieve breathing difficulties, a portion of its cost may be deductible. The same logic applies to exercise equipment. A treadmill prescribed as part of a treatment plan for a specific disease could be deductible, while one purchased for general fitness is not.

The Adjusted Gross Income Threshold

The ability to deduct medical costs is limited by your income. You can only deduct the portion of your total medical expenses that exceeds 7.5% of your Adjusted Gross Income (AGI). Your AGI is your gross income minus certain “above-the-line” deductions, like contributions to a traditional IRA or student loan interest, and is calculated on Form 1040.

To illustrate how this threshold works, consider a taxpayer with an AGI of $80,000. The 7.5% threshold would be $6,000. If this individual incurred $9,000 in total qualifying medical expenses, they could deduct $3,000, which is the total expense minus the AGI threshold.

The cost of DME is added together with all other eligible medical payments you made during the year. This includes doctor and dentist visits, prescription medications, and health insurance premiums paid with after-tax money.

Claiming the Deduction on Your Tax Return

To claim the deduction, you must choose to itemize your deductions rather than taking the standard deduction. For the 2024 tax year, the standard deduction is $14,600 for single filers and $29,200 for those married filing jointly. If your total itemized deductions do not exceed your standard deduction amount, you will not receive a tax benefit from your DME purchase.

The deduction is reported on Schedule A (Form 1040), Itemized Deductions. You will enter your total unreimbursed medical expenses, calculate the 7.5% AGI limitation, and subtract it to arrive at your deductible amount. You should retain all receipts for the equipment, proof of payment, and any related documentation from medical providers, such as prescriptions or letters of medical necessity, as proof for the IRS.

Special Considerations for Capital Expenses

Some medical expenses take the form of capital improvements to your property, which have their own specific rules. A medical capital expense is an improvement made to your home for a medical reason, such as installing an elevator for a heart patient or constructing entrance ramps for a wheelchair user. The cost of these permanent improvements is deductible only to the extent that the expense exceeds any increase in the value of your property.

For example, if a homeowner spends $15,000 to install a chair lift to accommodate a disability, and a property appraisal determines the lift increased the home’s market value by $5,000, the deductible medical expense is $10,000. If an improvement does not increase the home’s value, its entire cost is deductible. Certain improvements are presumed not to increase a home’s value and can often be fully included as a medical expense:

• Widening doorways
• Modifying kitchen cabinets
• Adding support bars
• Grading land for easier access to the home

Amounts paid for the operation and upkeep of these capital assets, like the electricity to run a lift or routine maintenance, are also deductible as medical expenses in the year they are paid.