Summary of What This Blog Covers:
- Which medical expenses are truly deductible
- How to benefit from the 7.5% AGI rule
- Common write-off mistakes to avoid
- Strategic CPA guidance for health-related tax planning
Life happens. Sometimes in the most unexpected ways. A health scare. A complicated diagnosis. Caring for an aging parent. Or a year where your business took a back seat so you could focus on healing on your own or someone else’s.
If you’re a businesswoman who’s navigated one of those years, first: we see you. It takes courage to lead a company while also carrying the weight of life’s personal challenges. And second: there may be tax relief available that no one told you about.
Medical expenses, when documented and understood properly, can lead to significant tax savings. But understanding what qualifies and how to apply it to your unique tax situation isn’t always intuitive. That’s where a knowledgeable, caring CPA becomes an essential part of your support system.
At Insogna, we specialize in working with women business owners. And that means not only understanding your numbers, but your life behind the numbers. In this guide, we’ll break down the medical deduction landscape in clear, empowering terms, so you feel confident heading into tax season no matter what the past year has brought.
Start With the Basics: What Qualifies as a Medical Deduction?
According to the IRS, a medical expense is deductible if it is primarily for the diagnosis, cure, mitigation, treatment, or prevention of disease. This includes both physical and mental health.
Now, that’s a formal definition. Let’s make it practical. These are the most common qualifying medical expenses our clients successfully deduct each year:
- Payments to doctors, dentists, surgeons, therapists, or medical specialists
- Hospital care or clinic fees
- Prescription medications (but not over-the-counter drugs unless prescribed)
- Costs of inpatient addiction recovery programs
- Mental health treatment, including counseling and psychiatry
- Durable medical equipment (wheelchairs, oxygen, CPAP machines, etc.)
- Long-term care services, including nursing home expenses under specific conditions
- Health insurance premiums (when paid out-of-pocket with after-tax dollars)
- Fertility treatments and related procedures
- Transportation costs to and from medical appointments
- Lodging (up to $50/night) if treatment requires travel away from home
- Special home improvements related to medical needs (more on that below)
If you incurred these expenses during the year and weren’t reimbursed by insurance or a pre-tax plan (like an HSA), they might be deductible but only if they cross a certain threshold.
The 7.5% AGI Rule: The Threshold You Must Exceed
Here’s the piece many people don’t see coming: You can only deduct the portion of your medical expenses that exceeds 7.5% of your Adjusted Gross Income (AGI).
Let’s do the math:
If your AGI is $100,000, then only medical expenses above $7,500 are deductible. If you had $12,000 in qualifying expenses, you could deduct $4,500.
Now, let’s say your business had a tough year and your income dropped to $60,000. Suddenly, your threshold becomes $4,500—meaning you can deduct more of those expenses.
This is why years that feel personally and professionally hard can actually bring opportunities for meaningful tax savings. But they require documentation and strategic planning.
A trusted Austin tax accountant can help you determine whether you’ve exceeded that threshold and if you haven’t yet, whether any future planning (like the timing of surgeries or treatments) can help you maximize next year’s deduction.
What Doesn’t Count: The Expenses That Often Confuse People
Sometimes it’s easier to understand what doesn’t count because the IRS draws hard lines. Here are some common non-deductible expenses that clients are often surprised to see disqualified:
- Over-the-counter medicine (unless prescribed)
- Cosmetic surgery or procedures (unless medically necessary due to trauma or illness)
- Gym memberships or personal trainers (even if prescribed, they often don’t qualify)
- General wellness expenses (like massages, acupuncture, or essential oils)
- Vitamins and supplements (again, unless prescribed)
- Non-prescription fertility tracking tools
- Organic foods or special diets (even for health reasons, unless medically prescribed)
It’s not that these expenses aren’t valuable to your health. They absolutely are. But from a tax perspective, they won’t help you reduce your bill.
Still not sure what qualifies? That’s when working with a knowledgeable CPA in Austin, Texas (who listens first, and advises second) becomes essential.
Home Modifications for Medical Reasons: Yes, They Can Count
This is one of the most overlooked areas of tax deductions especially for women entrepreneurs who are also caregivers. Did you:
- Install a ramp for accessibility?
- Modify a bathroom or kitchen for someone with mobility issues?
- Add railings, lifts, or widened doorways?
- Install air conditioning or air filtration for severe respiratory illness?
If the modification was medically necessary and doesn’t increase the value of your home, it may be fully deductible. If it does increase your home’s value, only the portion that exceeds that increase is deductible.
Example: You install a lift for $8,000, and it increases your home’s value by $2,000. You can deduct $6,000.
This is where a certified public accountant near you, one who understands both tax and home equity, can provide insight and clarity that you won’t find in a standard tax software.
Caring for Others: Your Loved Ones’ Expenses May Also Qualify
You may also be able to deduct medical expenses you paid for:
- A spouse
- A dependent child (even adult children in some cases)
- A dependent parent
The key is that you must be able to claim them as a dependent on your tax return. And again, it must be an unreimbursed expense that you personally paid.
This is particularly important for women who are caring for aging parents or supporting children with ongoing medical needs while simultaneously running their businesses.
Having a compassionate CPA or tax preparer near you—someone who gets the emotional weight of what you’re carrying—can make this process smoother and more empowering.
Itemizing vs. Standard Deduction: Which Makes Sense in 2025?
Medical deductions only reduce your taxable income if you itemize your deductions so understanding whether that’s the right move is essential.
Here’s the simplified decision tree:
- If your total itemized deductions (including medical expenses above the 7.5% AGI threshold, mortgage interest, property taxes, charitable donations, etc.) exceed the standard deduction, itemizing could save you money.
- If they don’t, the standard deduction will likely provide greater benefit.
2025 Standard Deduction Amounts:
- Single filer: $14,000
- Head of Household: $21,050
- Married Filing Jointly: $28,000
At Insogna, we walk you through both scenarios—itemized vs. standard—so you can make the most informed, strategic decision. No guesswork. Just clarity, grounded in your real financial story, not just the numbers on the page.
What If You Took Time Off Work to Recover or Care for a Family Member?
This is where financial and emotional realities meet. If you paused your business or scaled back to care for your health or a loved one, you may have earned less but this also means a lower AGI, which could make more of your medical expenses deductible.
Let’s turn that challenge into strategy.
Our job is to help you turn difficult chapters into moments of financial empowerment without shame, overwhelm, or confusion.
How Insogna Supports Women Through Life’s Hardest Years
We’re not just your accountants. We’re your advocates.
Whether you’re facing:
- Unexpected medical expenses
- A high-risk pregnancy
- Chronic illness
- Mental health care
- Surgeries or long-term treatment
- Business disruptions due to caregiving
Our team steps in with care and clarity. We review your expenses, guide your recordkeeping, and build a tax strategy that respects both your story and your goals.
We’re not just another CPA in Austin, Texas. We’re a trusted partner to women entrepreneurs who want to lead bold businesses and manage their finances with confidence even when life gets hard.
Let’s Walk Through It Together
If you’ve had a tough year, there may be tax opportunities you haven’t considered. You don’t have to figure it out alone.
Let us help you understand what’s deductible, what’s strategic, and what’s next.
We’re here to listen, clarify, and support with all the sophistication of a seasoned tax professional, and the warmth of someone who truly cares.
Looking for a tax accountant or CPA near you who combines strategy with compassion?
You’ve found your people.
Schedule your consultation with Insogna today. Let’s turn your challenges into clarity and your tax return into a tool for healing and progress.