When Are Medical Copays Tax Deductible?
Medical copays are a qualifying tax expense, but deducting them requires meeting specific thresholds for your total medical costs and annual income.
Medical copayments are recognized by the Internal Revenue Service (IRS) as a valid medical expense, but their deductibility is not guaranteed. The ability to write off these costs depends on your total medical expenses for the year and meeting specific thresholds set by the U.S. tax code.
The Itemized Deduction Requirement
Before considering any medical costs, a taxpayer must determine whether to itemize deductions or take the standard deduction. The standard deduction is a specific dollar amount you can subtract from your taxable income. For the 2025 tax year, the standard deduction for single filers is $15,000, for married couples filing jointly it is $30,000, and for heads of household, it is $22,500.
The medical expense deduction, which includes copays, is an itemized deduction and can only be claimed if you choose to itemize. It is listed alongside other potential deductions, such as state and local taxes up to $10,000, home mortgage interest, and charitable contributions.
A taxpayer should only choose to itemize if their total itemized deductions exceed their available standard deduction amount. For many, the standard deduction is higher and provides a greater tax benefit without the need for detailed record-keeping.
Understanding the 7.5% AGI Rule
After determining that itemizing is the better financial choice, you must meet the Adjusted Gross Income (AGI) threshold. The IRS allows taxpayers to deduct only the amount of total qualifying medical expenses that exceeds 7.5% of their AGI. Your AGI is calculated on your Form 1040 and represents your gross income minus certain adjustments.
This rule limits who can benefit from the deduction. To illustrate, consider a taxpayer with an AGI of $80,000. Their medical expense threshold would be $6,000 (7.5% of their AGI). If their total qualifying medical expenses for the year were $8,500, they could deduct $2,500 ($8,500 – $6,000). If their total medical expenses were $5,900 or less, they would not be able to deduct any of their medical costs.
Identifying Qualifying Medical Expenses
Your copayments are part of your total medical expenses. To meet the 7.5% AGI threshold, you must aggregate all unreimbursed medical costs you paid during the year. According to IRS Publication 502, qualifying expenses include payments for the diagnosis, cure, mitigation, treatment, or prevention of disease, which encompasses payments to doctors, dentists, chiropractors, psychologists, and costs for prescriptions.
Other allowable expenses include payments for eyeglasses, contact lenses, hearing aids, and ambulance services. You can also include travel costs for obtaining medical care, such as mileage on your car, bus fares, or parking fees. Health and long-term care insurance premiums paid with after-tax dollars are also includable.
You cannot include expenses for which you were reimbursed by your insurance company. Funds paid from a pre-tax health savings account (HSA) or flexible spending account (FSA) cannot be counted, as this would amount to a double tax benefit. Costs for non-prescription drugs (other than insulin), cosmetic surgery, or general wellness items like gym memberships are not deductible.
How to Claim the Deduction
Once you have confirmed that itemizing is beneficial and your total medical expenses exceed 7.5% of your AGI, the final step is to claim the deduction on your tax return. This is done using Schedule A (Form 1040), Itemized Deductions. You will report your total medical expenses on line 1 of the schedule.
On line 2, you enter your AGI from Form 1040. Line 3 requires you to multiply your AGI by 7.5% (0.075) to calculate your threshold. Finally, on line 4, you subtract the amount on line 3 from your total medical expenses on line 1 to arrive at your deductible amount.
Meticulous record-keeping is fundamental when claiming this deduction. You should retain all documentation that substantiates your expenses in case the IRS has questions. This includes receipts from pharmacies and doctor’s offices, explanation of benefits (EOB) statements from your insurer to prove costs were not reimbursed, and detailed logs of mileage for medical-related travel. These records provide the necessary proof to support your claim.