Got Medical Expenses? Here’s How to Maximize Your Year-End Medical Tax Deductions

Medical Tax Deductions

Most medical expenses are at least partially tax deductible. But in many cases, you won’t benefit unless you claim it on your return.

Nobody wants to overpay their taxes. 

Tips for Maximizing Medical Tax Deductions

1. Max Out Your Health Savings Account (HSA)

If you’re covered by a high-deductible health plan (HDHP), contributing to a health savings account is possibly the smartest move you can make.

An HSA allows you to save for medical expenses tax–free, and reduces your tax bill now and in the future.

When you turn 65, you can use the money for any reason, penalty-free. You just pay income taxes on any amounts you withdraw, like an IRA.

2024 Contribution Limits:

Deadline: You can contribute for the 2024 tax year until April 15, 2025.

Learn More:  How To Switch to an HSA Compatible Plan

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2. Prepay Health and Long-Term Care Insurance Premiums

Not many people know this, but you can prepay up to 12 months of health or long-term care (LTC) insurance premiums.

This means you can cram next year’s deductible insurance premiums onto this year’s income tax return. You will reduce your taxable income for the current year by the amount of your prepaid insurance premiums.

Paying in cash isn’t required. Using a credit card or low-interest loan to cover premiums by December 31st still allows the deduction to be claimed for the current year as an individual taxpayer.

This strategy is particularly beneficial for self-employed individuals, as these premiums are deductible on Schedule 1 of Form 1040.

Note: If you have long-term care insurance, you have some limits on how much of your premiums you can deduct in a given year. The deductible amount is based on your age. See the table below for a breakdown:

Medical Tax Deduction Limits for LTC Insurance Premiums (2024)

Important: Not all long-term care insurance policies qualify for this favorable tax treatment. If you aren’t sure if you have a tax-qualified policy, ask your agent, carrier, or tax advisor.

Learn More: How To Use Your HSA To Pay Long-Term Care Insurance Premiums

3. Bunch Medical Tax Deductions Together in the Same Year

If you itemize your deductions (that is, you don’t take the standard deduction), you may be able to deduct the medical and dental expenses you paid for yourself, your spouse, and your dependents during the year.

However, you can only deduct them to the extent these expenses exceed 7.5% of your adjusted gross income.

Try to bunch as many medical expenses as you can into a single year. Don’t spread them out across multiple years, if you can help it. That means you pay taxes on that 7.5% of your income twice instead of just once.

Bunching expenses into a single year can potentially save thousands of dollars in taxes.

In many cases, you’ll want to cram as many of these expenses as possible into the current year. But in some instances, you’ll be better off pushing them into next year.

Here are the deductible expenses you should consider “bunching”:

• Medically necessary procedures
• Prescription medications
• Dental and vision care
• Home or car modifications for medical purposes
• Medically necessary travel expenses
• Durable medical equipment purchases. 

4. Reduce Your AGI to Increase Your Medical Tax Deductions

Lowering your adjusted gross income can unlock additional tax benefits.

For example, a lower AGI this year means you may qualify for a bigger subsidy for your health insurance next year. It may also allow you to contribute more money to a means-tested retirement account, such as a Roth IRA. This can save even more in taxes down the road.

Here are some great ways to reduce your taxable income:

A lower AGI also increases your eligibility for premium tax credits on Marketplace health insurance.

5. Deduct Medically Necessary Travel Expenses

Travel expenses for medical care are deductible if they are primarily for and essential to medical treatment.

Eligible Travel Expenses

Learn More: Using Your HSA for Travel Expenses

6. Use Your Home for Business

If you work from home, the business use of home deduction can lower your tax bill.

It doesn’t have to be a separate room. However, space must be used exclusively for business. You can’t conduct any personal activity in space.

Tip: Take a photo of your workspace. Be sure there’s no evidence of non-business use. You may need this photo if the IRS challenges your deduction later.

Learn More: IRS: Business Use of Home

7. Make Charitable Contributions

Donating to qualified charities reduces your taxable income.

Contributions made by December 31st will reduce your current year income. You do have to itemize your deductions by filing a Schedule with your Form 1040 when you file your taxes to take a large charitable deduction.

However, you can claim up to $300 per year even if you take the standard deduction.

The donations don’t have to be in cash. You can donate just about anything of value in serviceable condition and claim a deduction on it. The charity will give you a receipt with the estimated value of the deduction.

8. Don’t Forget State-Specific Deductions

Some states, including Colorado, offer additional deductions or credits.

Check your state’s tax rules to ensure you’re not missing opportunities. With careful planning, you can reduce your tax burden while preparing for a financially secure 2026.

9. Think Ahead

Finally, you can take steps to maximize your after-tax income for next year, too.

For example, you can switch to a High Deductible Health Plan that qualifies you to contribute to an HSA. You can also get a long-term care insurance policy in force. 

Compare Pricing on the Best HealthShare Plans Available

Medical Tax Deductions: What To Do Now?

At HSA for America, we work with your advisors to secure the best protection while maximizing your after-tax income.

We also help you avoid spending too much on health insurance by alerting you to promising alternatives like health sharing plans, HDHPs, and HSAs.

Let’s get started on your protection and tax-reduction plan, just book an appointment with an expert Personal Benefits Manager.

For Further Reading

• The Tax Treatment of Health Savings Accounts
• HSA Qualified Expenses
• 10 Ways High Income People Can Pay Less in Taxes