January 2018 – 2018 Tax Reform (3) – Medical Expense Deduction

This article will discuss on medical expense deduction under the 2018 tax reform.

For 2018, taxpayers who itemize deduction can write off qualifying medical expenses that exceeds 7.5 percent of their adjusted gross income (AGI) for tax year 2017 and 2018. Before the tax reform, the threshold for medical expense deduction was 10 percent of taxpayer’s AGI. AGI is taxable income minus any adjustment to income, such as contribution to traditional IRA or health saving account (HSA). However, the lowered threshold will go back to 10 percent for tax year 2019.

For example, a taxpayer with a gross income of $46,000 and medical expenses of $6,000 will be allowed a deduction of $2,550 ($6,000 – $46,000* 7.5%) under the tax reform.

For more information, please consult with your CPA.

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